Preamble

[Mr. SPEAKER in the Chair.]

HOUSE OF COMMONS (DESTRUCTION OF CHAMBER).

Mr. Speaker: I have to-day received a letter from the Chairman of the Press Gallery, enclosing a copy of a message to this House from members of the Press Gallery that I should like to read to the House:
The Parliamentary Press Gallery desire to offer their sympathy with the House of Commons in the loss it has suffered by the destruction of its historic Chamber, for nearly a century associated with the principles of free speech and a free Press. Members of the Press Gallery, sharing as they do in this loss, feel confident that the great traditions which the House of Commons enshrines are beyond the power of any enemy to destroy. (Signed) ARTHUR BAKER (Chairman).

Mr. Thorne: Will that letter be entered in the Journals of the House?

Mr. Speaker: Yes.

Oral Answers to Questions — GOVERNMENT DEPARTMENTS.

MINISTRY OF LABOUR (STAFF).

Mr. Higgs: asked the Minister of Labour whether he will give the names of officers in his Department in receipt of salaries exceeding £9 per week, that have been appointed since 1st April, 1940; and state their occupation prior to appointment?

The Minister of Labour (Mr. Ernest Bevin): Since 1st April, 1940, 448 persons have been appointed at salaries exceeding £9 per week. Although the further details desired could be obtained, the work in extracting the information would involve considerable time and labour, and having regard to the many urgent wartime tasks which are being undertaken by the staff in my Department, I should be grateful if the hon. Member would reconsider his request.

Mr. Higgs: Is it not a fact that the Minister of Information has been asked for similar particulars and has supplied them? If one Minister can do this, why cannot another?

Mr. Bevin: I do not refuse to supply them, but the staff of the Department is full up with work, and unless there is an extraordinary reason why a list of these people and their previous occupations should be compiled, I suggest that the Department should be allowed to get on with its ordinary work.

Mr. Lawson: Is my right hon. Friend aware that it is within the knowledge of those engaged in industry and those in close touch with the national effort that a great many of these men have been of great value at a critical time in the nation's history?

MARRIED WOMEN.

Mr. Parker: asked the Financial Secretary to the Treasury whether he is aware that married women temporarily employed in the Civil Service have to resign when pregnant, without guarantee of re-employment; and whether he will consider this provision and allow such women special leave with pay for such a period as they would be entitled to for ordinary sick-leave purposes?

Mr. Edmund Harvey: asked the Financial Secretary to the Treasury whether he has considered representations concerning the absence of satisfactory pro vision for married women in temporary Government employment in the case of childbirth; and whether, in view of the appeals that have been made to married women to undertake such service in the national interest, appropriate regulations will be made to deal with such cases, including at least leave of absence without pay for a suitable period before and after the birth of a child?

The Financial Secretary to the Treasury (Captain Crookshank): I have received no recent representations on the leave arrangements for married women in temporary Government employment in the case of childbirth. I am, however, quite willing that the matter should be looked into, and I think that it might be appropriately discussed through the normal Whitley procedure.

Oral Answers to Questions — MILITARY SERVICE.

RESERVATION.

Mr. Mathers: asked the Minister of Labour what opportunity for appeal against calling up will be afforded to a man previously called up and medically examined but subsequently found to be in a reserved category in respect of which the age has been raised, thus removing his reservation?

Mr. Bevin: A man who loses his reservation owing to a change in the Schedule of Reserved Occupations may then be permitted to apply for postponement on the ground of exceptional hardship although the normal time for applying, that is not later than two days after medical examination, has expired.

Mr. Mathers: I am much obliged to the Minister for the Answer, but would it not be better to regularise the position and safeguard the Army authorities from taking in a man who might be medically unfit by providing for a new medical examination? In this particular case it is a number of months since this man has been medically examined?

Mr. Bevin: I should want notice of that question.

DENTAL MECHANICS.

Mr. Brooke: asked the Minister of Health whether he is aware of a danger that the dental health of the civil population may suffer through the age of reservation for skilled dental mechanics being raised from 23 to 30 in the new Schedule of Reserved Occupations; and what arrangements is he making to prevent this?

The Minister of Health (Mr. Ernest Brown): I am aware of the change in the age of reservation of dental mechanics and that this will entail some reorganisation of the arrangements in dental practices to meet the new conditions. I do not, however, consider that these changes will endanger the dental health of the population.

Mr. Brooke: Has my right hon. Friend consulted the dental laboratories about this problem through their own organisation, and if not, will he do so?

Mr. Brown: We are in touch with them and I think there is machinery which will enable employers to make applications to

retain their mechanical assistants if they will make application to the Ministry of Health.

LIFE ASSURANCE COMPANIES AND FRIENDLY AND APPROVED SOCIETIES (STAFFS).

Mr. Rhys Davies: asked the Minister of Labour whether he is aware that the Ministry of Health, in its recent circular A.S. 330, informs all health insurance approved societies that, as from 1st October, 1941, there will be no reservation in the case of men of military age employed by them; that the work of the staffs of these societies is exceedingly technical; and will he reconsider the position and place these men, especially those employed by approved societies operating as separate sections of trade unions, on the same basis of reservation as those employed by trade unions?

Mr. Bevin: The decision that inspectors, supervisors and clerks employed by life assurance companies, friendly societies and approved societies, should cease to be reserved from military service this autumn was reached, in consultation with the Government Departments concerned, having regard to the general man-power position. The men thus becoming de-reserved will not, as a rule, be required to join their Units before 1st October, 1941, by which date it should be possible to train women and older men to replace them. Key men whose replacement has not been possible will, if necessary in the public interest, be considered for deferment of calling-up.

Mr. R. Davies: Does not my right hon. Friend see the anomaly of a trade union approved society which cannot keep its technicians on its staff because they have been completely de-reserved, whereas men of similar ages are reserved in the trade union branch of the same organisation?

Mr. Bevin: They were not reserved on the ground of their age. Trade unions made representations to the Department, and after consultation with the Department it was deemed desirable to reserve trade union officials at the age of 30. These trade union officials are responsible for much more than clerical work, They are very largely connected with the war effort in maintaining conciliation arrangements and all the rest of it in the country.

Oral Answers to Questions — NATIONAL WAR EFFORT (ALIENS).

Mr. Lipson: asked the Minister of Labour what restrictions are imposed by his Department which prevent friendly aliens from accepting employment that is offered to them?

Mr. Bevin: The only restrictions placed by my Department upon the employment of aliens are that wages and conditions of the employment should be not less favourable than those whch would be paid to a British subject who might be employed in a similar capacity and that the employment of the alien would not be detrimental to suitable unemployed British labour.

Mr. Lipson: In view of the statement made yesterday that there is work for all British labour, may I ask my right hon. Friend if it is necessary to insist on that condition?

Mr. Bevin: If there is no unemployed labour, then it is quite a formal thing, but I am tied by Resolution of this House, and so long as that Resolution stands I must observe it in administration, although there is, in fact, no delay if there is no British labour available.

Mr. Lipson: Would my right hon. Friend raise no objection to a young Czech accepting employment at a bank at Cheltenham, and inform the local employment officer to that effect?

Mr. Bevin: Security and other reasons must be taken into consideration, and I cannot give a general answer, but if my hon. Friend will let me have particulars, I will look into the matter at once.

Oral Answers to Questions — CONSCIENTIOUS OBJECTORS.

Mr. Cecil Wilson: asked the Secretary of State for the Home Department (1) whether he can state for a date in each three months since March, 1939, the number of those serving sentences as conscientious objectors; and the varying length of their sentences being served;
(2), whether he can state for a date in each three months, since March, 1939, the location of civil prisons, the number of males confined therein, distinguishing between those claiming to be conscientious objectors and others; and how many of

the former are serving a second or third sentence under the Military Training Act, and the National Service (Armed Forces) Acts?

The Secretary of State for the Home Department (Mr. Herbert Morrison): Statistics of prisoners are not kept in a form which would enable me to give the information asked for. If my hon. Friend wishes to know how many persons have been committed to prison for failure to comply with the requirements of the National Service (Armed Forces) Act, I will have these figures compiled, but it may not be possible to ascertain with accuracy how many of these persons claimed to be conscientious objectors.

Oral Answers to Questions — CIVIL DEFENCE.

ALIENS (CURFEW).

Mr. Benson: asked the Home Secretary whether, in view of the further hour of summer time, he will consider the possibility of extending the curfew for friendly aliens to 11.30 p.m.?

Mr. H. Morrison: Individual aliens against whom there is no security objection can already obtain from their local police exemption from the curfew if they can make out a case for such exemption: but I will consider whether any modification of the present curfew hour of 10.30 p.m. outside London can be made during the summer months.

Mr. Benson: Will my right hon. Friend remember that in London it has always been 12 p.m., and that during the summer months in the Provinces they now have to be in by 10.30, while it is daylight?

Mr. Morrison: I am aware of that, but there were special reasons for distinction, and maybe some distinction will have to be maintained. However, I will look into the matter, and I can assure my hon. Friend that I shall not be unsympathetic to the point of view he has put.

FIRE SERVICE.

Captain Cunningham-Reid: asked the Home Secretary in view of the fact that houses in London were recently gutted by fire because the owners had gone away and had had the water cut


off, and therefore when the available sand had been used up there was nothing on the premises with which to put out the fire, whether he will make it compulsory for owners of empty houses to leave water in baths and other receptacles in order to enable fires to be fought in their earlier stages?

Mr. H. Morrison: Recommendations to this effect have already been issued, and I am examining what further action is possible.

Sir Hugh O'Neill: Is there not an obligation on the owners of empty houses to give their keys to the air-raid warden?

Mr. Morrison: There is no obligation, and there are difficulties about making it a statutory obligation. But it is encouraged, and we have made recommendations. I am not happy about the situation, and I am considering what further action can be taken.

Captain Cunningham-Reid: While considering the matter, will the right hon. Gentleman examine at the same time the alternative of giving compulsory powers to local authorities in order that they may enter such houses to take the necessary precautions?

Mr. Morrison: I am considering that also.

Captain Cunningham-Reid: asked the Home Secretary whether his attention has been drawn to the hardship caused to fire-watchers in the long evenings by the operation of the Business Premises Fire watching Order, which enacts that watchers must be provided at all times outside business hours; and whether, in view of the fact that during the hours of daylight the risk of enemy action is almost negligible, and that there are people in the streets who would observe the outbreak of any fire, he will consider amending the Order to read between the hours of black-out instead of at all times, in order that large numbers of fire-watchers may be released, and thus enabled in many cases to work in their gardens and allotments?

Mr. Morrison: I think that without amending the Order effect can be given to an appreciable extent to the suggestion

made by the hon. Member, which had already been under consideration by my Department in consultation with the Fire Prevention Executive. Appropriate instructions on the matter are being issued by the Department responsible for the administration of the Order.

Captain Cunningham-Reid: Can the right hon. Gentleman say what the alterations are likely to be?

Mr. Morrison: No, Sir, not without notice.

Lieut.-Colonel Sir Thomas Moore: asked the Home Secretary whether it is laid down by regulation whether, in the case of fire watching, the home or business premises should come first with any employé who may be called on for service?

Mr. Morrison: A person who has obligations under the Business Premises Order is exempt from fire prevention duties in the area of his local authority under Article 4 (7) of the Compulsory Enrolment Order.

Sir T. Moore: Would there be any objection to an employé splitting up the 48 hours a month as to half at his place of business and half at his home?

Mr. Morrison: If that were mutually convenient, there would be no objection as far as we are concerned.

Mr. Kenneth Lindsay: asked the Home Secretary what proposals he has in mind for reorganising fire-watching arrangements?

Mr. Morrison: I am not at present contemplating any major changes in the general arrangements envisaged by the Fire Prevention Regulations and Orders. Improvements in details are continually under examination.

Earl Winterton: In making these improvements in detail, will the right hon. Gentleman take into consideration the very curious state of affairs, to which it is as well not to refer in public, which has arisen in regard to fire watching at the Palace of Westminster?

Mr. Morrison: Yes. I am not Ministerially responsible for that, but I have been taking an active interest and have been bringing my influence to bear for many weeks past.

Mr. Lindsay: Will the right hon. Gentleman be in a position to make a statement in a week, or two weeks?

Mr. Morrison: No, there is no statement to make.

Mr. Thorne: In the event of a house being empty and the key not being available, would not either the firemen or the wardens be justified in bursting the house open?

Mr. Morrison: Yes, and that is done, but it takes time. It is one of the most difficult pieces of administration that it is possible to imagine, but I can assure the House that there is no self-satisfaction about it. We are constantly considering it, but the point to which the hon. Member has referred is one of the difficulties.

TORCH BATTERIES (AIR-RAID WARDENS).

Mr. Daggar: asked the Home Secretary whether he is aware of the shortage of torch bateries in the case of wardens of an area of which he has been informed, and that the wardens complain of the danger involved in patrol without a. torch; and will he take steps to see that such articles shall be supplied to these men?

Mr. H. Morrison: I understand that the county authority responsible placed an order for batteries on 20th February and did not follow up the matter until 9th May. The suppliers have not been able to trace receipt of either letter. The matter has, I am informed, now been put right, and the batteries are being despatched at once.

ALLOWANCES (PERSONNEL, GLOUCESTERSHIRE).

Mr. Lipson: asked the Home Secretary whether he is aware that the Gloucester County Civil Defence authorities have reduced the supper allowance for first-aid and rescue parties and ambulance drivers, all unpaid and voluntary, from 1s. per night to 6d.; that this action is resented and compares unfavourably with the subsistence allowance of 3s. 6d. per night paid to members of the Home Guard; and will he take steps to enable the Gloucester County Civil Defence authority to restore these allowances?

Mr. H. Morrison: If any such reduction were to be made by the local authority, it would be the consequence of a temporary

reduction during the months of maximum daylight of the hours of duty of the personnel to a point below that for which, under arrangements approved by my Department, local authorities may provide meals on a grant-aided basis. I am, however, looking further into the matter.

Mr. Lipson: Is the Minister aware that at present unpaid voluntary helpers have to serve 12 hours before they get 1s.? Will he reduce the time to nine hours?

Mr. Morrison: I think there will be some relatively good news for my hon. Friend in an Answer which I am giving to a later Question.

INTERNEES.

Mr. Sorensen: asked the Home Secretary for what reason it has been found necessary to prohibit marriages between aliens in internment; and whether he will reconsider his decision in cases where both parties are at present interned, in view of the newly established mixed camp?

Mr. H. Morrison: A decision to allow marriages between parties of whom both are interned could not properly be taken without considering whether marriages are also to be allowed in cases where one of the parties is interned and one is free. Any general policy of allowing persons who are detained to marry would give rise to difficulties, and while I recognise that hard cases may sometimes occur I think the general rule must be that deprivation of liberty includes deprivation of liberty to marry.

Mr. Sorensen: Will my right hon. Friend be prepared to reconsider this matter in a few months' time?

Mr. Morrison: I am always willing to reconsider a matter, but, frankly, I would not like to hold out any optimistic prospects.

Mr. G. Strauss: Will my right hon. Friend realise that there is nothing against these people to show that they have done wrong?

Mr. Morrison: Yes, Sir, but we are at war, and the country has a right to detain foreign people, and certain consequences follow. The consequences may be unpleasant and inconvenient. We make them as little as we can, but it must not be assumed that because there


is no specific charge against an enemy alien, therefore we have particular obligations to do things that are very awkward to do.

Mr. Lipson: asked the Home Secretary whether the signing by refugees interned in Canada of a form that they did not desire to return to this country, as they hoped to go to the United States of America, will be held to prejudice their right to come back to this country should they find it impossible to enter the United States of America?

Mr. Morrison: The mere fact of the signing of such a document would not prevent the return to this country of an internee whose release I was prepared to authorise.

GAS ATTACK PRECAUTIONS.

Major Lloyd: asked the Home Secretary whether he is satisfied that the decontamination arrangements made by air-raid precautions authorities will, in the event of the use of poison gas by the enemy, be adequate for the decontamination of large numbers of people, as well as of streets, buildings, food, stores, etc.; and whether he is also satisfied with the progress which is being made with regard to the gas-proofing of public air-raid shelters in view of the grave risk which would be run by those in underground shelters in the event of a gas attack?

Mr. H. Morrison: The arrangements which have been made to meet gas attacks are constantly under review, and where deficiencies are found action is taken to remedy them. I am satisfied that the organisation which has been built up throughout the country to deal with any possible gas attack is being developed on the right lines, and no effort will be spared to expand and develop it further. As regards the second part of the Question, I am sending to my hon. and gallant Friend a copy of a circular which was addressed to local authorities concerning the ventilation and gas proofing of shelters.

DETENTIONS.

Commander Bower: asked the Home Secretary on what date the instructions with regard to detentions under Regulation 18B [Cmd. 6162, 1940] were communicated to the governor of Brixton Prison?

Mr. H. Morrison: On 26th February, 1940, two days before the detainees were transferred to his custody from Wands-worth Prison.

SHELTERS.

Mr. Stokes: asked the Home Secretary who was responsible for specifying the use of lime mortar for use in the construction of brick surface-shelters; and why lime cement mortar was not specified?

Mr. H. Morrison: I would refer my hon. Friend to the answer which I gave on 20th March to the hon. Member for West Fife (Mr. Gallacher).

Mr. Brooke: asked the Home Secretary whether he exercises any control over the offering to the public of air-raid shelters of private manufacture or construction, which purport to give as good protection as the official types of shelter; and whether there is any means by which a person possessing or contemplating the purchase of such a shelter can obtain an authoritative opinion on its resisting qualities?

Mr. Morrison: As the Joint Parliamentary Secretary explained on 10th April in reply to the hon. Member for East Middlesbrough (Mr. A. Edwards), I have instituted a scheme whereby manufacturers of proprietary types of shelters designed for erection indoors may submit their products for test. Some designs are already on the point of receiving approval. Intending purchasers of these or any other types of shelter would be well advised to obtain the services of a competent consultant. With the co-operation of the professional (institutions concerned, lists of consultants willing to give advice for a fee of half a guinea were drawn up last year, and furnished to local authorities. It was not possible to provide for every local authority's area but if, on application to his local authority, a person is unable to get the name of such a consultant, he should communicate with the Central Board of Advisory Panels of Professional Consultants at 1–7, Great George Street, S.W.1.

Mr. Brooke: Is the right hon. Gentleman aware that four people were killed in my constituency on a recent night entirely through putting their trust in a shelter which was not adequate for its


purpose, and will he ask the Minister of Information to give the utmost publicity to the rights of individuals, as described in his answer, so that lives may not be unnecessarily lost in 'future through over-confidence?

Mr. Morrison: I will do anything I can in that direction.

DEMOLITION WORKERS (ACCIDENT).

Mr. Thorne: asked the Home Secretary whether he can give any information in connection with the walls of a burned-out building in the city, which collapsed, trapping two demolition workers, of whom one was killed and the other seriously injured; and what precautions were taken to prevent the fall of big blocks of masonry?

Mr. H. Morrison: On the information given by my hon. Friend, I have had some difficulty in identifying the incident. I presume however he is referring to an incident where I regret a worker was killed and another injured by the collapse of a wall some distance from the site on which they were working. The wall collapsed suddenly, presumably as a result of cooling, fell on to a neighbouring building which itself collapsed and so caused the accident. All possible precautions are taken to avoid accidents of this kind but my hon. Friend will appreciate that in this type of work it is impossible to eliminate all risks.

Mr. Thorne: Do I understand that it was impossible to timber the building up?

Mr. Morrison: I understand that the building in which the men were was not in trouble. The Building that fell was one that had fallen as a consequence of the raid. It may satisfy my hon. Friend if I tell him that there was a subsequent inquest, when it was established that there was no question of negligence on the part of those in charge of the operations.

PERSONNEL (CONCESSIONS).

Mr. R. C. Morrison: asked the Home Secretary whether he is yet in a position to make a statement about the supply of uniforms of a more substantial type; the institution of pay for rank; and other improvements in the conditions of service of Civil Defence personnel?

Mr. H. Morrison: I am glad to be able to announce various improvements in the

conditions of service of Civil Defence personnel. It has been decided to enable local authorities to obtain on a grant-aided basis serge uniforms, overcoats, berets and boots for whole time members of the Civil Defence services and for part-time members who undertake to perform, if called upon, not less than 48 hours' duty per month, where the existing bluette uniforms are not thought to be adequate for the duties they undertake. Appropriate new uniforms will be designed for women members of the services who have not already been provided with a suitable type. The date of issue of overcoats, uniforms, etc., will, of course, depend on supply considerations. The uniforms of the Police War Reserve and A.F.S. are not affected by this announcement.
A scheme of pay for certain intermediate ranks in the A.R.P. services will also be introduced at an early date. The arrangements for the provision of meals for part-time volunteers, including members of the local authorities' fire prevention organisation, who undertake relatively long spells of duty away from their homes are also under revision. I propose to suggest to local authorities that where they cannot adopt the preferable course of supplying meals as at present authorised, they should, as an experiment, make payments in lieu of meals to unpaid volunteers who cannot take their meals at home on the basis of 2s. for spells of duty lasting eight hours and 3s. for 12-hour spells. The expenditure incurred would rank for grant-aid. The sick-leave concession to paid personnel has also been reconsidered and, subject to medical certificates, they will in future be entitled to receive the equivalent of their full pay during absence through sickness up to a maximum period of 13 weeks, whether, as at present, the sickness is due to war service injuries or it arises out of other conditions of their service. I also hope to be able to introduce a system whereby in areas selected by the Regional Commissioners on account of heavy and frequent raiding, whole-time Civil Defence personnel will be eligible to receive one free return railway voucher in a year, so that their annual holiday may be spent in more peaceful surroundings. All these improvements will be explained in greater detail to local authorities in the near future.
I should like to mention the valuable help which I have received from my hon. Friend the Joint Parliamentary Secretary the Member for Huddersfield (Mr. Mabane) in the review which has led up to this announcement.

Mr. R. C. Morrison: Is my right hon. Friend aware that his reply will give very great satisfaction, not only to the Civil Defence service, but to those who are responsible for organising it?

Mr. H. Morrison: I am very much obliged to my hon. Friend.

Mr. Lipson: From what date will these improvements begin to operate?

Mr. Morrison: I have indicated that as to uniform, it is, of course, a matter of supply, and no doubt some time will elapse, but there is no reason why the allowances should not start as soon as it is administratively practicable. Graded pay should come into force from the beginning of next month, subject to examination by the Regional Commissioners of the proposals of local authorities. The increases of pay, if they cannot be made by that time, would be retrospective to the beginning of the pay week following the first pay week in June.

EVACUATION (CHILDREN).

Commander King-Hall: asked the Minister of Health whether he will consider issuing an order designating certain areas, of which he has been informed, and which are areas likely to be subjected in a special degree to enemy air-attacks, as areas in which it shall be a legal offence to retain a child under 14 years of age?

Mr. E. Brown: All the towns mentioned in the communication which I have received from my hon. and gallant Friend are evacuation areas, and schemes for the evacuation of children are being operated in all such areas. The Government are satisfied, however, that it would not be right in present circumstances to enforce upon unwilling parents the compulsory evacuation of their children.

Commander King-Hall: As it is already illegal for children to witness certain types of horrific films, is it not possible to make it illegal for children to be kept in places where, even if they are not injured, they

are bound to witness some unpleasant scenes?

Mr. Brown: That is a matter of opinion. The fundamental issue raised goes far wider than that particular opinion and involves fundamental issues of the; direst character.

Miss Cazalet: Does not the right hon. Gentleman think it would be in the best interests of the children's future that they should not remain in these areas?

Mr. Brown: We have done and are doing, and shall continue to do, all we can to pave the way for the evacuation of children from these areas and to bring our influence to bear on all concerned—local authorities and the children themselves.

Commander King-Hall: I beg to give notice that I shall raise the matter on the adjournment.

Sir T. Moore: asked the Minister of Health how many hutted camps have been built for the reception of evacuated children; how many children do they accommodate; and how many further camps it is proposed to build for this purpose?

Mr. E. Brown: Thirty camps have been provided for this purpose, and they at present accommodate 6,600 children. As I indicated when I replied to a Question by my hon. and gallant Friend on 8th May, the provision of further camps must depend primarily on the availability of labour and materials.

Sir T. Moore: As this seems to be the ideal method of caring for children from the dangerous areas owing to the easy provision of education, playing fields, and so on, will my right hon. Friend use his influence with the Ministries responsible to ease the position as regards labour and material?

Mr. Brown: I would not like to say that this is the ideal way. It may be the ideal way of housing for a fortnight or so in summer-time, but there are particular reasons against camps accommodating a large number of children. I visited one of the best camps in the Midland this week-end and had conversations with the teachers concerned, and there are serious medical issues which do not arise when


you are merely dealing with a temporary flow of boys and girls.

BILLETING (UNSUITABLE PERSONS).

Mr. Wakefield: asked the Minister of Health what steps are being taken to prevent the recurrence of cases similar to the one of which he has been informed whereby workers in a verminous condition were compulsorily billeted on a family with children; and is he satisfied that proper steps are being taken to ensure that when compulsory billeting takes place families are not exposed to vermin and disease?

Mr. E. Brown: I have discussed this matter with my right hon. Friend the Minister of Labour and National Service, and arrangements are being made for the accommodation in hostels of persons who arc unsuitable for billeting.

Mr. Wakefield: Is my right hon. Friend aware that no compensation is payable to householders, as is the case with evacuees, where damage is done and sheets and blankets have to be burned, and will he take steps to remedy that?

Mr. Brown: I will look into the position.

BOMBED AREAS (REHOUSING).

Mr. Lindsay: asked the Minister of Health what is the responsibility of senior regional officers in rehousing persons from bombed areas?

Mr. E. Brown: The responsibility for the rehousing of homeless persons rests with the local authorities, to whom full powers of billeting and of the requisitioning of houses have been delegated. The duty of my senior regional officer is to advise them in the making of plans and to assist them in operating them when an emergency occurs. If necessary he arranges for the distribution of the homeless over a number of areas.

Mr. Lindsay: In view of the fact that this machinery is not at present achieving this object, I give notice that I shall raise this question on the Adjournment at the earliest possible date.

Oral Answers to Questions — LADY LUCAS (POLICE ACTION).

Colonel Arthur Evans: asked the Home Secretary whether he has concluded his examination of the papers which were

submitted to him by the honourable Member for Cardiff, South, relating to the case of Lady Lucas, and whether he will inform the House of the action he proposes to take?

Mr. H. Morrison: Yes, Sir; and after considering the information given in those papers and in a report which I have received from the Commissioner of Police, I have come to the conclusion that there is no ground for any further action on my part.

Colonel Evans: In view of the fact that the right hon. Gentleman does not find it possible to take any further action, can he inform us why the original charge against Lady Lucas was withdrawn, which did not permit of that lady's stating her defence in the police court?

Mr. Morrison: I understand there were reasons as the case developed which led to the police taking the view that it was necessary to proceed with the charge and press it to its ultimate conclusion; but, on the other hand, as to the actual conduct of the police on the spot, I am satisfied that it was correct, and I see no reason to intervene with them.

Colonel Evans: Will my right hon. Friend bear in mind the treatment which Lady Lucas received when she arrived at the police station, where she was prohibited from communicating with her husband or anybody else for an hour and a half; and do not the documents I submitted to the right hon. Gentleman for his consideration bear out the statement I have made? In view of the unsatisfactory nature of the Reply—

Mr. Morrison: These are allegations that ought to be answered. The evidence before me does not bear out what the hon. and gallant Gentleman has said. I am bound to add this. The police have a difficult job to perform. They had an arrest to make, and whether it be a man or a woman, whether it be Mrs. Brown, of Poplar, or anybody else, if anybody interferes with the police in the execution of their duty, I am going to support the police.

Commander Locker-Lampson: Is the Home Secretary aware that the hon. and gallant Member whose wife we are speaking about was injured so severely that


his back was broken, and that he was not free to give evidence on behalf of his wife?

Mr. Morrison: I am aware of that, and it is possible that that was one of the factors in the mind of the police in regard to the police-court proceedings. Rightly or wrongly that may have been one of the factors. But with regard to persons interfering with the police in the execution of their duty and causing trouble, the police are going to have my support, whoever the person concerned may be.

Earl Winterton: I beg to give notice that I shall raise this matter on the Adjournment, when the Minister will be able to make a fuller speech.

Mr. Morrison: I am much obliged to the Noble Lord.

Oral Answers to Questions — JUVENILE DELINQUENTS (EDUCATION).

Mr. Rhys Davies: asked the Home Secretary whether, in view of the increase in juvenile delinquency, he will take steps to provide all possible educational instruction to juveniles under detention?

Mr. H. Morrison: Educational instruction is, of course, given to persons detained in approved schools and Borstal institutions and, so far as possible, to those in remand homes. As regards persons detained in prisons, I am afraid that, for the reasons given in my answers to previous Questions on this subject, I cannot contemplate the resumption of educational facilities at present, whether generally or for any specified classes of prisoners.

Mr. Edmund Harvey: Is the Home Secretary aware of the very serious effect on juvenile prisoners of that decision, and will he keep in mind the possibility of resuming educational work for juvenile prisoners?

Mr. Morrison: Yes, Sir, I will keep that in mind. The hon. Member will see that for the bulk of juvenile prisoners proper provision is made. It is in the ordinary prisons that the difficulty arises, and there are real staff problems there. I can assure the hon. Member that if I can do anything about this matter, I shall be very happy to do it.

Mr. Lipson: What is the objection to giving permissive powers to governors if they are able to exercise them?

Mr. Morrison: That would not work administratively.

Oral Answers to Questions — SHOPS (EARLY CLOSING).

Mr. Rhys Davies: asked the Home Secretary whether he is aware that, at the last Easter annual delegate meeting of the National Union of Distributive and Allied Workers, representing over 100,000 members employed in the distributive trades, a resolution was passed in favour of making Saturday the half-day closing of shops; and will he take steps to implement this resolution?

Mr. H. Morrison: Yes, Sir; and personally I fully appreciate the desire of shop assistants to have their leisure at the same time as other workers. The change proposed, however, might have serious consequences, not only to traders, but also to those sections of the public who have no adequate opportunity to shop except on Saturday afternoons. I do not think that the proposal which would require legislation to be made effective could be entertained except after a searching investigation, which it would not be possible to undertake at the present time.

Oral Answers to Questions — DOG-RACING.

Mr. Tinker: asked the Home Secretary whether he will have inquiries made into the attendance at dog-race meetings; whether such attendances are interfering with ordinary transport; and whether the use of motor cars is taking petrol that could be made better use of for essential needs of the war?

Mr. H. Morrison: The attendance at dog-racing meetings is already subject to restrictions in relation to the capacity of the individual track. I am informed that the times of meetings are so arranged that ordinary transport is not interfered with. The use of petrol, apart from the small basic allowance to private motorists, is not permissible under the Motor Fuel Rationing Order, and I understand that active steps are being taken to check it.

Mr. Tinker: I am very pleased to hear that this is being done, because it has


been causing great concern to people to see petrol consumed for these purposes.

Mr. George Griffiths: Will my right hon. Friend see that these people do the same as the miners do at dog-racing tracks? I saw one last Sunday, and there was not a motor car there. The men had to walk.

Mr. Morrison: That is a useful commentary on the observation of the hon. Member.

Oral Answers to Questions — EXIT PERMITS (NORTHERN IRELAND).

Dr. Little: asked the Home Secretary whether, in view of the approaching holiday season and the desire expressed on all sides for definite information, he will make it clear that Northern Ireland people resident in Great Britain are entitled to visit their friends in Ulster once every six months?

Mr. H. Morrison: As a result of the relaxation of the restrictions on travel between the two countries in November last, exit permits are now granted to enable persons to travel to their homes in either country not more than once in any period of six months. Exit permits are not granted, however, to enable persons to visit their friends in either country.

Dr. Little: Will the right hon. Gentleman definitely remove certain hampering and hindering restrictions, which are causing great vexation, at the earliest possible moment?

Mr. Morrison: I am very sympathetic to the point that the hon. Member puts, but travel between Northern Ireland and this country has to be controlled, both for shipping and for security reasons, and I cannot hold out a prospect of a material relaxation.

Dr. Little: asked the Minister of Information whether, in view of the uncertainty regarding travel permits that prevails, he will arrange that speakers who are crossing from Britain to Northern Ireland to address meetings at conventions, conduct seaside services and perform other like duties, will receive the required permits to enable them to fulfil their engagements?

Mr. Morrison: It continues to be necessary to restrict travel between this

country and Ireland, and I should not feel justified in authorising the general grant of exit permits to enable persons to travel to either country for the purpose of fulfilling engagements of the kind mentioned. Exit permits are, however, granted to enable clergymen to travel to either country to take up an appointment for a period of not less than three months.

Dr. Little: There are conventions and seaside services that have been held in Ulster for more than a quarter of a century unbroken, and may I ask my right hon. Friend to look into this matter and grant permits to these friends who have gone there year after year?

Mr. Morrison: I appreciate my hon. Friend's point and I am not unsympathetic to it, but in addition to the things he has mentioned there is a war on, which involves a lot of other considerations.

Mr. Sorensen: Will the right hon. Gentleman see that no preferential treatment is given to one type of speaker as compared with others?

Mr. Morrison: That is precisely one of the difficulties which I should be landed into if I listened to my hon. Friend's plea.

Oral Answers to Questions — NATIONAL HEALTH INSURANCE (GOVERNMENT PROPOSALS).

Mr. Ellis Smith: asked the Minister of Health whether he is aware of the extreme urgency of the need to increase the benefits payable under the National Health Insurance, in particular, sickness, maternity and disablement benefits; by what amounts it is intended to increase the benefits; and can he make a statement on the matter in view of the urgency?

Mr. E. Brown: Yes, Sir, and, with permission, I propose to make a statement at the end of Questions.

Mr. Tinker: asked the Minister of Health whether he is now in a position to make a statement on the position about review of national health benefits; and will he also give some indication how long it will be before the matter will be brought before Parliament as there is discontent among those who are suffering ill-health and cannot get sufficient to meet their requirements?

Mr. Brown: I would ask my hon. Friend to await the statement I propose to make after Questions.

Later—

Mr. Brown: I am glad to be able to inform the House that the Government intend to introduce legislation on this subject very shortly. This legislation cannot, in present circumstances, be more than an interim measure designed to give effect to certain changes in the Health Insurance scheme which are necessary to meet war-time conditions. It is, however, the Government's hope that it will be possible to carry through in due course a thorough overhaul of the existing schemes of social insurance, particularly health and pensions insurance and workmen's compensation. It is obvious that legislation for so wide a purpose could not be introduced at an early date and that its scope and content must necessarily depend upon many conditions which cannot yet be foreseen. The Government are, however, of opinion that the comprehensive survey of the existing schemes which must be an essential preliminary to such legislation should be set on foot at once as part of post-war planning. This survey is to be undertaken forthwith by my right hon. Friend the Minister without Portfolio in association with the other Ministers concerned.
The Bill which the Government intend to introduce shortly will propose, as from the commencement of the next benefit year in January next, to increase by 3s. the statutory rates of sickness and disablement benefits payable under the Health Insurance Acts. That is to say, the sickness benefit for a man would be raised from 15s. to 18s., and his disablement benefit from 7s. 6d. to 10s. 6d. For single women and widows the new rates would be 15s. and 9s. respectively, and for married women 13s. and 8s. Any cash additional benefits will, of course, continue to be payable over and above these minimum rates. These changes will be made possible by the payment of State grant on the usual basis and by increasing by 2d. the weekly contributions payable in respect of men and women alike—1d. of this increase to be borne by the employer and 1d. by the insured person.
The Bill will also propose to raise to £420, as from January next, the re-remuneration limit for the compulsory health and pensions insurance of non-manual workers. In addition to other health and pensions rights, this will give to rather less than 500,000 fresh persons a title to free medical treatment and attendance, and the new position thus created is being discussed with the medical profession.
Power will also be sought in the Bill to deal with the position in insurance of civilian prisoners of war, and other similar war problems.

Mr. Ellis Smith: Between now and when the legislation is introduced, will my right hon. Friend also consider the need to increase the benefits payable under National Health Insurance to old age pensioners?

Mr. Rhys Davies: In respect of the wider inquiry that is to be made later on into this very important problem, will the right hon. Gentleman consult the approved societies and other appropriate organisations about it?

Mr. Brown: Certainly, and not only so, but it is the intention of the Government to make it a wide and thorough investigation with a view to elaborating a comprehensive and unified scheme which will give to the nation full results in health and happiness for the future.

Mr. Graham White: Is the right hon. Gentleman aware of the satisfaction that will be felt at the step he is now taking to bring these benefits into line with those of the Ministry of Labour, and in view of the statements that have been made about the overhaul of the services as a whole, will he consult with the Minister without Portfolio as to the desirability of making an immediate investigation into the reserve contributory capacity of the country, in order that this may not be absorbed in directions which are not of such importance?

Mr. Brown: It will be obvious from my statement that we have this very much in mind, for one of the conditions underlying the present decision regarding a 2d. increase in the contributions is not to put the contributions too high, as that might jeopardise a thorough review such as is suggested in my statement.

Mr. Benjamin Smith: Can the right hon. Gentleman inform the House as to whether his remarks regarding the insurance of civilian prisoners of war will apply to civilian prisoners such as the seamen who were made prisoners as a result of the Altmark incident, and whether this is intended to implement the promise made by his predecessor that legislation would be introduced to cover them?

Mr. Brown: That is so. There were certain difficulties about the Altmark and we have overcome them by administrative action, and there are certain other matters of a similar nature, and in the Bill we propose to take power which will be comprehensive in cases of that kind.

Mr. Frankel: Cannot the increased benefits proposed by the right hon. Gentleman come into operation before 1st January next?

Mr. Brown: It is absolutely impossible to get the Bill through, and do the enormous amount of administrative work, which includes the preparation of over 14,000,000 new cards and other things, before January. I wish it were possible to do it earlier.

Viscountess Astor: Will the right hon. Gentleman bear in mind that single women really need more sick benefit than single men, because women are so much kinder to single men than they are to single women?

Mr. Brown: I am certainly not competent to give an answer to that. The Noble Lady will see that in this case we have given a similar increase to men and women both for sickness and disablement benefit.

Mr. James Griffiths: May I ask the right hon. Gentleman to consider in particular an increase in the disablement benefit, which will remain at 10s. 6d. per week, thereby compelling such persons to seek public assistance?

Mr. Brown: I cannot go any further than the statement I have made, which is a fully considered statement of Government policy.

Viscountess Astor: It is a similar increase, but still not equal.

Mr. Brown: It is equal in regard to the actual increase made. I think it may

very well be the first time such an increase has been made without differentiation.

Dr. Edith Summerskill: Hear, hear. It is the first time.

Viscountess Astor: Still more for men—

Mr. Brown: The Noble Lady often contradicts Ministers, and I must be allowed to contradict her. The differentiation is not in the new increases but in the original scale.

Viscountess Astor: Exactly.

Oral Answers to Questions — DIPHTHERIA (IMMUNISATION).

Sir Francis Fremantle: asked the Minister of Health whether he will take action to promote a concentrated effort to secure immunisation of all children against diphtheria, in order to save the loss of some 2,500 children from death every year and to stamp out the disease as has been so done in other countries?

Mr. E. Brown: A vigorous campaign to promote the immunisation of children against diphtheria is already being pursued, in co-operation with the Central Council of Health Education, through the medium of special posters and leaflets, circulars to local authorities, broadcast talks, Press publicity, films and window displays. Every possible step will continue to be taken to bring home to parents the importance of this matter.

Sir F. Fremantle: Is anything being done to ask members of Parliament to assist this drive to stamp out this appalling disease?

Mr. Brown: I am sure that my hon. Friends will take note of that.

Commander Bower: Is my right hon. Friend aware that certain members of the medical profession are opposed to immunisation and that that does not do much good to the campaign?

Sir F. Fremantle: Is my right hon. Friend aware that there are members of the Navy who are opposed to the naval policy?

Oral Answers to Questions — LOCAL AUTHORITIES (FINANCE).

Sir John Mellor: asked the Minister of Health whether he will introduce legislation to enable local authorities to create reserve funds to make some provision for the consequences of decreased expenditure on maintenance during the war, and for the cost of works suspended?

Mr. E. Brown: I am not aware of any general desire on the part of local authorities for legislation of the kind suggested by my hon. Friend, and as at present advised I do not contemplate its introduction.

Sir J. Mellor: Under the present law are not some local authorities being put in a false financial position which may well involve doubling their rates later on?

Mr. Brown: I do not think so, but if my hon. Friend has any case where there is a special degree of urgency, perhaps he will let me know about it.

Sir J. Mellor: asked the Minister of Health whether he will indicate the level to which local authorities, adversely affected by war conditions, will be expected to raise their poundage rate before applying for Exchequer assistance to maintain essential services; and whether he will issue a statement showing the previous poundage rate and the subsequent poundage rate in each instance where local authorities have already received such assistance?

Mr. Brown: The poundage of the rate to be levied is a matter for consideration in the light of the circumstances in each case, regard being had among other things to the existing level and any increases which may have been made in recent years. It would not be in the public interest to publish the statement asked for in the second part of the Question.

Sir J. Mellor: In view of the large amount of public money involved in this question, is it not desirable that some rule should be laid down, at any rate for the private information of local authorities, and is it not desirable that local authorities should know where they stand rather than that this should be left to the arbitrary decision in each case of my right hon. Friend's Department?

Mr. Brown: I do not think that local authority representatives would take that

view. In a number of areas and in others referred to by my hon. Friend where circumstances were similar, no increase in rate poundage was required. We ought to proceed on the facts as disclosed.

Oral Answers to Questions — OLD AGE PENSIONS.

Mr. Tinker: asked the Minister of Health what is the position of an old age pensioner who goes to reside in the Isle of Man, both in respect of his pension and supplementary pension, if he happens to be getting both?

Mr. E. Brown: So far as pensions under the Contributory Pensions Acts are concerned, arrangements exist under which old age pensioners, originally qualified in England, can continue to draw their pensions at any convenient Post Office in the Isle of Man. As regards non-contributory pensioners, I would refer my hon. Friend to the answer which my right hon. and gallant Friend the Financial Secretary to the Treasury gave my hon. and gallant Friend the Member for Coventry (Captain Strickland) on 14th August last.

Mr. Tinker: What about supplementary-pensions?

Mr. Brown: Where there are supplementary pensions payable to persons who hold pensions under the Contributory Pensions Acts, what I have said would apply.

Oral Answers to Questions — NORTHERN IRELAND (CONSCRIPTION).

Dr. Little: asked the Prime Minister whether he has considered the resolution from the Northern Ireland branch of the British Medical Association to the effect that conscription should be applied at once to the medical profession in Northern Ire land on the same basis as in Great Britain; and whether he will accede to this request?

The Lord Privy Seal (Mr. Attlee): My right hon. Friend is unable to trace the receipt of the resolution to which my hon. Friend refers. If he will supply my right hon. Friend with a copy of this resolution, it will be considered in connection with the statement on the general question of applying conscription in Northern Ireland, which, as was stated in reply to Questions on Tuesday last, my right hon. Friend hopes to make on the first Sitting Day after this week.

Oral Answers to Questions — SYRIA (GERMAN ARMED FORCES).

Mr. Garro Jones: asked the Prime Minister whether he has any information as to the extent of the assistance which is being given, on the authority of the Vichy Government, to the German armed forces in Syria; and whether this assistance extends to the transfer of some of the equipment of the French Syrian forces to German forces?

Mr. Attlee: My right hon. Friend has no exact details as to the full extent of the assistance afforded to the Germans in Syria by the Vichy Government. It is, however, known that the authorities have placed their aerodromes at the disposal of the Axis Powers, and there is good reason to believe that surplus French equipment it being supplied to the rebel forces in Iraq.

Mr. Garro Jones: Without asking for any stronger premature action, may I ask whether the Government are satisfied that the strongest possible methods of propaganda among the French Syrian forces are being conducted by the Ministry of Information and through other channels?

Mr. Attlee: I would like to have notice of that question.

Mr. Garro Jones: Is that a question on which the Lord Privy Seal is unable to assure the House without my giving notice?

Oral Answers to Questions — LEGISLATION BY REFERENCE.

Mr. Keeling: asked the Prime Minister whether he is aware that his predecessor's instructions to Parliamentary counsel to mitigate the inconveniences of legislation by reference, whenever possible, by using typographical devices to indicate the changes proposed, and by setting out in a schedule the law as it will be when amended, rendered such legislation more intelligible, both to hon. Members before enactment, and to lawyers and the public after enactment; whether he is aware that the Finance Bill reverts to the old practice; and whether he will cause the improved practice to be reintroduced?

Mr. Attlee: My right hon. Friend assumes my hon. Friend to refer to the answer which was given to him by my right hon. Friend's predecessor on 26th July, 1938. That statement does not

altogether bear the interpretation which the present Question puts upon it. He can, however, assure my hon. Friend that the suggestions made by him in 1938 have not been overlooked, even though the number of cases in which Parliamentary counsel are able to proceed experimentally in accordance with his predecessor's instructions will necessarily be limited for the reasons stated in the answer to which I have referred.

Mr. Keeling: Does my right hon. Friend appreciate that we had a number of Bills printed in this improved form showing in a Schedule the alterations to be made in the law and using different typographical devices? That practice has now been abandoned, and I understood that the idea was to" save paper. Will my right hon. Friend consider any evidence that I send him that hon. Members really would like to understand Bills?

Sir William Davison: Does not my right hon. Friend consider that in these days, when the discussion of Bills has to be curtailed, it is more than ever necessary that amendments in the law should be made clear to Members and the public without elaborate search, especially in a Bill like the Finance Bill, which touches severely all classes of the community?

Mr. Attlee: I will certainly consider any points which my hon. Friend the Member for Twickenham (Mr. Keeling) offers to send to me.

Mr. Lipson: Will my right hon. Friend arrange for a copy of "The New Despotism," by the late Lord Chief Justice, to be placed in the office of every Minister of the Crown?

Oral Answers to Questions — CAPTURED ENEMY TROOPS (DISGUISE).

Major Vyvyan Adams: asked the Prime Minister whether His Majesty's Government hold themselves free to refrain from treating as prisoners of war any enemy troops captured in the guise of British, Dominion or allied uniforms?

Mr. Attlee: His Majesty's Government will be guided in this matter by the laws and usages of war as laid down in International Declarations and Conventions.

Major Adams: Can my right hon. Friend say whether an enemy soldier, so disguised and so captured, is liable to be treated as a common spy?

Mr. Attlee: I cannot add anything to the answer I have given.

Commander Sir Archibald Southby: Is not this a matter which is best left to the general officer commanding on the spot?

Oral Answers to Questions — OYSTER CULTURE.

Sir J. Graham Kerr: asked the Minister of Agriculture whether, in view of the demonstrated practicability of rearing oysters under artificial conditions up to the stage suitable for planting out, he will take steps to encourage oyster-breeding facilities with the object of obtaining supplies of home-produced young oysters to provide for the development and extension of oyster-fisheries in suitable localities round our coasts without having recourse to importation from abroad?

The Minister of Agriculture (Mr. R. S. Hudson): I have the possibility in mind and intend to encourage, so far as practicable, an increase in the breeding of oysters by artificial means.

Sir J. Graham Kerr: Is my right hon. Friend bearing in mind that experience in foreign countries shows that properly worked oyster fisheries provide an important source of food, not for the rich but for the poor?

Mr. Hudson: It is very unlikely that any result could accrue for at least three years.

Oral Answers to Questions — AGRICULTURE.

LAND CULTIVATION (LABOUR).

Mr. De la Bère: asked the Minister of Agriculture whether, with a view to getting a million acres drained and into cultivation forthwith, he will confer with the Secretary of State for War and the Minister of Labour, for the purpose of the provision of 10,000 Pioneer or other troops being made available for this work within the next month?

Mr. Hudson: I have already consulted both my colleagues. My right hon. Friend the Secretary of State for War is unable to place any additional Pioneers or other

troops at my disposal beyond those already working, but my right hon. Friend the Minister of Labour and National Service has agreed to make available within the next few months at least 10,000 civilians for work of this kind.

Mr. De la Bère: Does my right hon. Friend realise that the point is the un-awareness of the War Office and the Ministry of Labour as to the urgency of making provision for the national larder, and is he aware that the matter cannot be lightly dismissed, indeed, that it cannot be dismissed at all?

Mr. Hudson: I would suggest to my hon. Friend that he should address his Question to my two colleagues.

Mr. Granville: Has the right hon. Gentleman made representations to the Secretary of State for War for the release of skilled agricultural workers from home forces for work during important farming seasons, such as harvests?

Mr. Hudson: We are continually making applications to the Army authorities for the release of individual men, and, as far as I am aware, the bulk of them are granted.

FARM PURCHASES.

Mr. R. J. Taylor: asked the Minister of Agriculture whether a non-agriculturist, who has entered on, or purchased, a farm since the outbreak of war, is to be excused military service, while efficient men actually doing the essential work of the farm are liable to be called for service?

Mr. Hudson: No, Sir, men who are not genuine agriculturists will not be permitted to evade military service by entering on, or purchasing, a farm. County war agricultural executive committees have been instructed to investigate and report on any cases of this sort which come to their notice. Where the facts warrant it the case will be referred to my right hon. Friend the Minister of Labour and National Service, so that he may take the necessary action.

Mr. Garro Jones: Has any criterion ever been offered to the county war agricultural committees to guide them as to the test they should impose as to whether a man is a genuine agriculturist or not, and particularly whether his experience has been limited to the period since the outbreak of the war?

Mr. Hudson: I think that can reasonably be left to the common sense of the war agricultural committees, which are composed of practical agriculturists.

Oral Answers to Questions — POST OFFICE.

CANCELLATION STAMPS (PUBLICITY).

Captain Cunningham-Reid: asked the Postmaster-General whether he will reconsider his decision not to allow the slogan "Lend to the Limit" to be used as a postal-date stamp?

The Assistant Postmaster-General (Mr. Allan Chapman): The whole question of the use of cancellation stamps for publicity is being reviewed. I will communicate with my hon. and gallant Friend as soon as a decision has been reached.

SALVAGE OF MAILS (RECOGNITION).

Mr. Thorne: asked the Postmaster- General whether he can give any information about a man named Mr. English, who was working at a London sorting office along with three others, when a bomb hit the office, where he then helped to salvage mails with a hurricane lamp?

Mr. Chapman: Mr. English is a temporary sorter and along with other sorters on duty rendered excellent service on the night of the 10th–11th May, when during a severe air raid the building in which he was working was struck by a bomb.

Mr. Thorne: Is any recommendation coming from the Post Office about this particular man?

Mr. Chapman: My hon. Friend may rest assured that the services of this officer and all other officers concerned have been brought to the notice of my right hon. Friend.

Oral Answers to Questions — MINISTRY OF INFORMATION (BROADCASTS TO SWITZERLAND).

Mr. Mander: asked the Minister of Information whether any representations were sought from, or made by, either the Swiss Government or any person in Switzerland with reference to the British broadcasts to that country which were recently terminated?

The Parliamentary Secretary to the Ministry of Information (Mr. Harold Nicolson): These broadcasts were started

as an experiment, and it was represented to us both officially by the Swiss Government and otherwise that the reaction to them in Switzerland was unfavourable. In these circumstances, and for the reasons stated by my right hon. Friend in his reply of the 14th May to the hon. Baronet the Member for the City of London (Sir G. Broadbridge), the broadcasts were discontinued as from 7th May. I should wish to emphasise that this decision was taken purely on the merits of the particular case.

Mr. Mander: Is it not the case that the unfavourable reaction in Switzerland was entirely due to Nazi terrorism and propaganda, and will my hon. Friend consider the inadvisability of submitting to pressure of that kind and reconsider the question of continuing these excellent broadcasts, which were quite welcome in Switzerland?

Mr. Nicolson: That is not the fact. It was not due to Nazi terrorism. The information we got from all sources was that these broadcasts were not really welcome to the Swiss people, who did not wish to start a broadcast war over their area.

Mr. Noel-Baker: Is it not a fact that the Swiss people listen to many of our services from London?

Mr. Nicolson: Yes, Sir.

Oral Answers to Questions — GIFTS FROM OVERSEAS.

Mr. Mander: asked the President of the Board of Trade whether he has any statement to make with reference to restrictions on the sending of parcels from overseas to persons in this country, having regard to the necessity of saving shipping space?

The Parliamentary Secretary to the Board of Trade (Captain Waterhouse): Ordinary importations by parcel post are subject to the same control by licensing as importations in bulk; but, in order to provide for bona fide gifts sent to this country by friends abroad, facilities have been allowed for the importation, under certain conditions, of such gifts sent to private persons or to certain charitable organisations in this country. These arrangements are being modified in order to conserve shipping space for more


urgent supplies. Particulars of these modifications have been given in a Press notice, a copy of which I am sending to my hon. Friend.

Mr. Mander: Will my hon. and gallant Friend bear in mind that the present arrangement is greatly to the advantage of the rich, who can have numerous parcels sent to them, whereas those who have no rich friends cannot?

Captain Waterhouse: All relevant circumstances have been borne in mind.

Oral Answers to Questions — EXPORT TRADE.

Mr. Riley: asked the President of the Board of Trade whether he is aware of the inconvenience and loss to merchants and traders who have been urged to increase their exports who are subsequently informed, after goods have been specially made for definite orders, that the permission to export to certain countries has been withdrawn; and whether, in order to avoid unnecessary loss in the export trade, he will consider establishing a panel of traders to meet this situation?

Mr. Harcourt Johnstone (Secretary, Overseas Trade Department): When exports to certain countries are subjected to control for reasons of economic warfare, it would clearly be undesirable to relax the control so imposed in favour of goods specially made for those destinations. Where exports have been subjected to control for other reasons, sympathetic consideration is given to applications for licences to export goods specially made for a particular destination, which cannot be disposed of in the home market or in other export markets. Every possible allowance, therefore, is and will be made in such cases, and my right hon. Friend does not consider that the establishment of a panel of traders would materially help in dealing with difficulties of this sort.

Oral Answers to Questions — COAL INDUSTRY.

CENTRAL SCHEME (AMENDMENT) ORDER.

Mr. T. Smith: asked the Secretary for Mines what is the import of the Draft Order, entitled the Central (Coal Mines) Scheme (Amendment) Order, which he has laid before the House?

The Secretary for Mines (Mr. David Grenfell): The Draft Order is designed to implement proposals submitted to me by the coal industry for a levy on all coal sold. This levy will be required to meet costs incurred in consequence of the grant of a guaranteed pay week under the terms of the Essential Work (Coal Mining Industry) Order, 1941. A Resolution will be laid before the House at an early date inviting approval of the Draft Order; I would add that the matter is fully explained in a White Paper, which will be available in the Vote Office to-day.

Mr. Smith: In discussing this particular Order will it be possible to discuss the whole position in the mining industry; and may I ask, also, whether my hon. Friend is still keeping in close touch with both sides in the industry in order to get a satisfactory settlement of the wages question?

Mr. Grenfell: It will be necessary to have a discussion on rather a wide scale. The problem is not limited in range and we shall be able to discuss everything concerned.

Mr. G. Griffiths: Is the hon. Member expecting this discussion before the Whit-sun holiday?

Mr. Grenfell: Yes, Sir.

TAMWORTH COLLIERY.

Sir J. Mellor: asked the Secretary for Mines whether he will explain the policy of his Department with regard to the imminent dismantling of the Tamworth Colliery, which supplies important factories in Birmingham, and local householders; whether these consumers can be supplied as cheaply from other sources; and whether he is satisfied that equally-productive employment will be offered to and accepted by the displaced employés?

Mr. Grenfell: The Tamworth Colliery is a small unit in the Warwickshire coalfield and has for some time past been receiving substantial assistance from other Warwickshire owners. They are no longer prepared to continue their subvention, and, on a careful review of all the circumstances, I am not prepared to take exceptional measures to maintain it in production. The colliery is an old one and the output per man employed is very much below the average of other collieries in the district. I am assured that the men


who have been employed at the Tam-worth Colliery will be found employment in neighbouring collieries and that the output from the Warwickshire coalfield will not suffer as a result of the abandonment of this mine.

Sir J. Mellor: Is it desirable in wartime that a pit should go out of production, solely for financial reasons?

Mr. Grenfell: It is not desirable, but this pit has been kept in production long after it ceased to be financially sound. I am now assured that there will be no loss of output in closing the pit, and there is expectation of better output if the men are employed elsewhere.

Oral Answers to Questions — FOOD SUPPLIES.

SPECULATION.

Mr. Denville: asked the Parliamentary Secretary to the Ministry of Food whether he is aware of the unrest among food controllers and shopkeepers in this country; and whether he will consider regulations for the adequate punishment of profiteers, including the death penalty?

Mr. Chater: asked the Parliamentary Secretary to the Ministry of Food whether he will now issue an order providing for the licensing of all wholesalers engaged in the distribution of foodstuffs, making it a condition of any licence that the wholesaler concerned was actually engaged in such business at the outbreak of war?

The Parliamentary Secretary to the Ministry of Food (Major Lloyd George): I would refer my hon. Friend to the answer I gave to my hon. and gallant Friend the Member for East Leicester (Captain Lyons) on Wednesday, 14th May. Infringements of Ministry of Food Orders are offences under the Defence (General) Regulations, 1939, and No. 92, paragraph (1), of those Regulations prescribes the penalties on conviction.

Mr. Denville: Does the hon. and gallant Gentleman consider that the death penalty is too harsh a punishment for profiteers who benefit out of the nation's need?

ROAD TRANSPORT WORKERS.

Mr. Gledhill: asked the Parliamentary Secretary to the Ministry of Food

whether he is aware of the lack of feeding accommodation for transport workers on the Great North Road; and whether he can now make better arrangements for serving hot meals, especially for those engaged on night work?

Major Lloyd George: I have no special information relating to the Great North Road, but I am aware that road transport workers have, in some cases, experienced difficulty in obtaining supplies of food in cafes when they are on a journey. After consultation with the Road Haulage Central Wages Board, I am satisfied that the position will be materially improved if the proprietors of the cafes concerned will supply the local food offices with particulars of the number of meals which they are in the habit of serving. By this means they will be assured of supplies of rationed foods upon the prescribed scale.

Oral Answers to Questions — FATAL ACCIDENTS (DAMAGES).

Sir W. Davison: asked the Attorney-General whether the attention of the Government has been drawn to repeated pronouncements by His Majesty's Judges, when hearing claims for damages in the case of fatal accidents, as to the impossibility of placing a money value on the happiness which a child or adult might have enjoyed if his life had not been terminated; and whether a short Bill will be introduced to remedy this defect in a law which it has been found impossible to administer?

The Attorney-General (Sir Donald Somervell): I am not sure whether my hon. Friend is suggesting that this head of damages should be completely abolished. This would, I think, raise controversy and would involve an alteration of the Common Law. There are difficulties in getting a matter of this kind adequately considered in war-time, but my Noble Friend will consider whether there is any alteration which might command general agreement.

Sir W. Davison: Will the right hon. and learned Gentleman indicate to the House how it is possible to put a money value on the amount of happiness which, say, a child of five or a man or woman of 40 would have had but for his or her premature death by reason of an accident?

The Attorney-General: I can only refer my hon. Friend to the exhaustive judgments on that subject made by the other place in their judicial capacity.

Oral Answers to Questions — RUDOLF HESS.

Major Lloyd: asked the Secretary of State for Air whether he has any statement to make as to the position of Wing-Commander the Duke of Hamilton in relation to the arrival in this country of Rudolf Hess?

The Secretary of State for Air (Sir Archibald Sinclair): When Deputy-Führer Hess came down with his aeroplane in Scotland on 10th May, he gave a false name and asked to see the Duke of Hamilton. The Duke, being apprised by the authorities, visited the German prisoner in hospital. Hess then revealed for the first time his true identity, saying that he had seen the Duke when he was at the Olympic Games at Berlin in 1936. The Duke did not recognise the prisoner and had never met the Deputy-Führer. He had, however, visited Germany for the Olympic Games in 1936, and during that time had attended more than one large public function at which German Ministers were present. It is therefore quite possible that the Deputy-Führer may have seen him on one such occasion. As soon as the interview was over, Wing-Commander the Duke of Hamilton flew to England and gave a full report of what had passed to the Prime Minister, who sent for him. Contrary to reports which have appeared in some newspapers, the Duke has never been in correspondence with the Deputy-Führer. None of the Duke's three brothers, who are, like himself, serving in the Royal Air Force, has either met Hess or had correspondence with him. It will be seen that the conduct of the Duke of Hamilton has been in every respect honourable and proper.

Major Lloyd: Can my right hon. Friend enlighten the House in regard to what action was taken to intercept Hess's aeroplane; and is he aware that his answer will give the greatest possible satisfaction to the many friends of the Duke of Hamilton in many parts of the country, and not least in the Royal Air Force and in the county of Renfrew?

Sir A. Sinclair: The reply to the first part of the question of my hon. and

gallant Friend is that every effort was made to intercept the aeroplane in which the Deputy-Führer came to this country, and, indeed, at the time when he baled out one of our night-fighting Defiants was hot on the trail of his aeroplane.

Mr. Batey: When the Minister says that there has been no correspondence between the Duke of Hamilton and Hess, are we to understand that the report in the Press was wrong that Hess had written a letter to the Duke of Hamilton before coming to this country?

Sir A. Sinclair: I cannot speak as to whether or not Hess wrote a letter to the Duke of Hamilton; I can only say that no letter from Hess to the Duke of Hamilton has reached the Duke or any responsible authority in this country.

Mr. Garro Jones: Is it possible for the right hon. Gentleman to give any clue as to why Rudolf Hess should have picked on the Duke of Hamilton?

Sir A. Sinclair: I cannot account for the motives of Rudolf Hess.

Commander Locker-Lampson: Was not the Duke of Hamilton a Member of this House and honoured very greatly, and is he not a very gallant pilot?

Major Vyvyan Adams: Does the Secretary of State entertain the theory, expressed outside, that the motive of this highly undesirable alien was not to call upon the noble Duke but to consult a really good German doctor?

Mr. Granville: When are we likely to have an authentic and official statement by His Majesty's Government to the people of this country and of the United States of America as to what is behind the whole of this Hess affair?

Sir A. Sinclair: That is not a question which should be addressed to me.

Oral Answers to Questions — FRANCO-GERMAN COLLABORATION.

Mr. Lees-Smith: (by Private Notice) asked the Secretary of State for Foreign Affairs whether he has any statement to make about our relations with the Vichy Government in the light of recent developments?

The Secretary of State for Foreign Affairs (Mr. Eden): Yes, Sir. It was


announced in Vichy on 14th May that Admiral Darlan's report on his visit to Hitler had been unanimously approved by the Vichy Government and that the effect of these deliberations would shortly be felt. On the following day Marshal Pétain broadcast a short statement to the French people appealing for their unquestioning acceptance of whatever results might issue from the negotiations between Admiral Darlan and the German Government. These negotiations have been described in Vichy, as opening up a new phase in Franco-German collaboration, of which, no doubt, the action of the Vichy Government in allowing Syrian aerodromes to be used by German aircraft is an example.
President Roosevelt has stated clearly his view of this new and sinister development in Vichy policy, and the United States Government have already taken certain preventive action in regard to French shipping in United States ports.
In the confused and uneasy explanations which have been put out in Vichy, it has been suggested that the policy of collaboration between the Vichy Government and Germany is to be political and economic only, and it has been stated that the Vichy Government have no intention of attacking Great Britain and still less the United States. These explanations cannot conceal that the Vichy Government have embarked upon a course which must place the resources and territories of France and her Empire increasingly at the disposal of a Power which is the enemy, not only of France's former Ally, but of France herself. The French people will, His Majesty's Government are sure, regard this policy as incompatible with the honour of France. Nor will they believe that the future of France and her Empire will be better served by surrendering them to Hitler's so-called New Order than by resolutely maintaining and defending their independnce until such time as the victorious Allies shall complete their liberation.
His Majesty's Government must, however, take account of the acts of the Vichy Government. If the Vichy Government, in pursuance of their declared policy of collaboration with the enemy, take action or permit action detrimental to our conduct of the war, or designed to assist the enemy's war effort, we shall naturally hold ourselves free to attack the enemy wherever he may be found, and in so

doing we shall no longer feel bound to draw any distinction between occupied and unoccupied territories in the execution of our military plans. On 7th August last, His Majesty's Government assured General de Gaulle that it was their determination, when victory was won, to secure the full restoration of the independence and greatness of France. It rests with the French people to determine whether they will play their part in assisting those who have continued to fight for the liberation of France, or whether France will henceforward serve in the ranks of Germany's satellites.

Mr. Noel-Baker: Will the Foreign Secretary make it plain to the French people that we understand that the Vichy Government does not represent French people, but came into power by treason and is maintained by the German Army, and will he ask the Minister of Information to give the fullest possible opportunity to General de Gaulle and his colleagues to explain to Frenchmen in the colonies and in France the effects of this flagrant breach of the armistice, and the great part which the French colonies might still play in bringing about the rapid downfall of the Nazis?

Mr. Eden: The answer to both those questions is "Yes, Sir" The object of my statement was to make quite plain to the French people the views of His Majesty's Government, and an understanding of the position in which the Vichy Government has placed them.

Mr. Mander: Can my right hon. Friend say whether, in the new circumstances, it is proposed to continue the system by which food ships were permitted to cross the Atlantic from the United States and pass through the blockade for the benefit of Vichy France?

Mr. Eden: I have laid down the principles which will govern our action. My hon. Friend will not expect me to describe the details of that action.

Mr. Thorne: Has the right hon. Gentleman any information in connection with the reduction of expenditure in relation to the military occupation of France?

Mr. Eden: Perhaps my hon. Friend would not mind putting that question down.

Sir W. Davison: Will the British Government see that they are not anticipated by action on the part of the Vichy Government in handing over to the German authorities French colonial or other places which would be of advantage to the Germans in connection with the waging of the war?

Mr. Eden: That is a question of military action to which clearly I cannot give an answer. I think the principles are quite plain, and that action must be left to the military.

Sir Henry Morris-Jones: Can my right hon. Friend give an assurance to the world on behalf of the British Government that when victory is attained the men of Vichy will be held accountable for their treachery?

Mr. Granville: In view of the fact that we are at total war, if the Vichy Government take the action referred to by my right hon. Friend, will His Majesty's Government hold themselves prepared and ready to bomb the town of Vichy?

Mr. Eden: I really do not think I should go beyond my statement.

BUSINESS OF THE HOUSE.

Mr. Lees-Smith: May I ask the Lord Privy Seal whether he will make a statement on the forthcoming Business of the House?

The Lord Privy Seal: The Business will be as follows:
On the first Sitting Day—Report and Third Reading of the Liabilities (War-Time Adjustment) Bill [Lords] and the Second Readings of the Landlord and Tenant (War Damage) (Amendment) Bill and the Temporary Migration of Children (Guardianship) Bill [Lords]
On the second Sitting Day—Motion to approve the Central (Coal Mines) Scheme (Amendment) Order and the. Committee and remaining stages of the Temporary Migration of Children (Guardianship) Bill [Lords]
On the third Sitting Day—Motion for the Whitsuntide Adjournment.
If there is time, on any day, the Second Reading of the Rating (War Damage) (Scotland) Bill will be taken.

Mr. Hore-Belisha: If my right hon. Friend is in a position to make a statement on developments in the Mediterranean and if the situation justifies it, will he consider making such a statement before the Adjournment of the House to-day?

Mr. Attlee: I will bring that request to the notice of my right hon. Friend the Prime Minister. I think the House will agree that my right hon. Friend is always desirous to give the House the fullest information that can be given, compatible with the requirements of the military situation.

Earl Winterton: My right hon. Friend will appreciate that no discourtesy is intended if I ask him whether it would not save the time of the Prime Minister, who is, we know, very pressed, if he himself could make a statement, however short, on the Adjournment to-day—if the circumstances justify it—in view of the very important events which are in progress in the Mediterranean.

Sir Herbert Williams: Can my right hon. Friend indicate when the Committee stage of the Finance Bill is likely to be commenced?

Mr. Attlee: I think, soon after the Whitsuntide Adjournment.

Mr. Granville: May I ask whether an opportunity will be given in the near future for a discussion on the Ministry of Information? Further, as there is no official Opposition, or party politics, will my right hon. Friend consult the general sense of the House as well as the usual channels, which are slightly rusty at the present moment?

Mr. Attlee: We always endeavour to find out what is the general sense of the House.

KITCHEN AND REFRESHMENT ROOMS (HOUSE OF COMMONS).

Special Report from the Select Committee, brought up, and read; to lie upon the Table, and to be printed. [No. 91.]

MESSAGE FROM THE LORDS.

That they have agreed to—

Fire Services (Emergency Provisions) Bill,

Allied Powers (Maritime Courts) Bill, without Amendment.

Amendments to—

East Surrey Gas Bill [Lords] without Amendment.

That they have passed a Bill, intituled "An Act to enable provision to be made for the temporary guardianship of children sent out of the United Kingdom during the present war period" [Temporary Migration of Children (Guardianship) Bill [Lords].

TEMPORARY MIGRATION OF CHILDREN (GUARDIANSHIP) BILL [Lords]

Read the First time; to be read a Second time upon the next Sitting Day.

Amendments made by the Lords to the Bill as circulated to this House; to be printed [Bill 32].

Preamble

[Mr. SPEAKER in the Chair.]

ORDERS OFTHE DAY.

FINANCE BILL.

Order for Second Reading read.

The Chancellor of the Exchequer (Sir Kingsley Wood): I beg to move, "That the Bill be now read a Second time."
I do not think that the House will expect me, in asking it to afford a Second Reading to the Finance Bill, to review again the financial problems of our war economy and the measures which we are taking in relation to it. In my recent Budget speech I dealt with those matters at length and, I hope, comprehensively. To-day, I desire to add only one or two brief observations upon them.
The House, and I think the country as a whole, have shown very general agreement with the Budget and the conceptions upon which it was founded. There was in particular one proposition which I sought to emphasise in my Budget speech and which I would emphasise again, namely, that the function of taxation in war-time is not merely to defray from revenue as much as possible of the current expenditure of the Government but to check the development of an excess of purchasing power over the available supply of goods and services. We must, certainly, not regard public finance in time of war from a too narrow financial standpoint. It should be, and I have endeavoured to make it, a central feature of a much wider economic policy. That wider economic policy must obviously be adapted to the needs of the changing economic situation, and so, accordingly, must be the security of our Budgets. That is why I have felt it my duty on this occasion to make very drastic proposals.
The Battle of the Atlantic and the Battle of the Mediterranean strike our imagination as main features of the strategic position at the moment, but they are, no less, main features of the present economic situation. So is the fact that our war production is now getting into its full stride. Those major features and that major fact determine, in a very large degree, the supplies of goods that can be made available for civilian consumption, and it is to that condition of affairs that the present Finance Bill is adapted. It is the corollary in the financial sphere of the great war

effort which we are making and of the intensity of the struggles in which we are engaged.
Accordingly, as I think every one of my hon. Friends will agree, at this moment we need both very heavy taxation and continuously increasing savings. The great War Weapons Week for London is now in full swing. I am confident that everyone who realises all that is at stake will make this an occasion to drive home the need for still greater sacrifices in the restriction of expenditure, coupled with continuous saving. I am indebted to many of my hon. Friends for the help they are giving. I spoke to Lord Kindersley this morning, and he told me that up to the end of banking hours yesterday the London total had reached the magnificent figure of £70,250,000; so already we are within striking distance of the target of £100,000,000.
I hope that this week will carry us still further towards the national target of genuine savings which I set in the Budget. We need this year a further £200,000,000 to £300,000,000 added to our rate of genuine savings; and, despite the increased burden of taxation, I think I gave good reasons for my belief that the War Savings Campaign could accomplish this object. It is too early yet to judge how the country is responding, especially as in the few weeks which have passed Easter has intervened, but I note with gratification that the figures of smaller savings—which are probably the best immediate index of the response—show a further advance over those for the earlier part of the year. I feel justified in taking this as an earnest that every individual in the country will play his part in reducing consumption and increasing savings, recognising that the Budget proposals and the other steps taken are soundly designed to avoid the disaster of inflation and to enable us to prosecute the war until victory is attained.
I would like to emphasise again the constant necessity for the avoidance of waste and extravagance in connection with our large expenditure. The Budget, as I have said, was generally accepted, but such heavy sacrifices as it entailed can only be on the basis that the great sums raised shall be wisely spent. It is true that the rapid growth of our expenditure is not in itself evidence of waste, but rather of growing production;


but, obviously, the more we spend, the more important it is to eliminate waste and extravagance, and the larger the expenditure, the greater is the danger. Nor is it true that it is evidence of waste that we have reached a rate of expenditure per day in this war about double that which was reached in the last war. Any such argument entirely disregards the increase in complexity of modern armaments over the last 25 years.
While it may be true that there is no great amount of what I would call deliberate waste, what there may be is thoughtless extravagance in varying degrees in the day-to-day operations of many individuals. This can best be combated—as it certainly must be, to the greatest extent—not only by supervision, but by instilling into everyone a realisation of the rigid need for the utmost care, as a patriotic duty. So that in everything they do they realise how vital it is to save money, in order not only to keep down expenditure, but to reduce the demands which the war makes upon materials, so many of which have to be brought from overseas.
The Ministry of Supply a few months ago appointed a Director of Economy, who has been hard at work, both in that Department and in consultation with other Government Departments, in impressing the need for economy, partly by preventing undue use of materials, but also in the equally important ways of substituting cheaper and commoner materials for the more expensive and rarer ones and of recovering from scrap anything which can be used again.
The War Office and the Air Ministry have each appointed a Controller-General of Economy, to exercise general control over all matters connected with salvage and to ensure that the utmost economy is practised in the holding, use and disposal of materials of all kinds. I am glad to know that a large number of anti-waste committees have been established in units, for recommending and initiating measures for the prevention of waste. Analogous action has been taken by the Ministry of Aircraft Production to secure economy in the use of materials in the agency factories. Through this machinery, which I am glad to know is rapidly developing, a continuous drive is being maintained to secure that in the Fighting Services and

in the Government production Departments rigid economy in all its aspects is practised as an essential element in their day-to-day work. The total number of people who will pay Income Tax in this country has now been raised to 7,800,000. It is no more than bare justice to all of them that every step should be taken to prevent any waste of the nation's resources at this critical time.
The Finance Bill is a long, and, as I think my hon. Friend the Member for South Croydon (Sir H. Williams) has appreciated, a rather complicated, piece of legislation. That, unfortunately, is generally the case with Finance Bills, whether the Budget is simple in its composition or whether it involves a great number of separate proposals, for each such Bill has to include a good deal of legislation which is more or less formal, and to pick up numbers of points which arise in the course of the year and which require the attention of Parliament. My right hon. Friend the Member for Devon-port (Mr. Hore-Belisha), who has been Financial Secretary to the Treasury, will appreciate that anyone who might like to try his hand at drafting will find that it is not always easy to express what is required in ordinary, everyday language.
It is not necessary for me on this occasion to examine in detail the contents of the Bill; there will be later opportunities for that. I will content myself now with mentioning one or two points of general interest. The House will have observed that the repeal of the Medicine Stamp Duties is not dealt with in the Finance Bill. In my Budget Speech, I explained that the proposals for the repeal of those duties would be accompanied by certain further legislative provisions, to be included in a Bill to be presented by my right hon. Friend the Minister of Health.

Sir Francis Fremantle: What does my right hon. Friend mean by that? Can we be quite certain that that part of the bargain will be carried out this Session?

Sir K. Wood: I am just coming to that point. My right hon. Friend and I have agreed that it would be more satisfactory, from every point of view, that the repeal of the Medicine Stamp Duties and the other provisions should figure in the same Bill. As all the provisions could not be


included in a Finance Bill, we have thought it the most convenient way, to meet all points of view, to include the proposals as a whole in a separate Bill which is to be presented very shortly by my right hon. Friend.
A good deal of interest was taken in the proposals which were made, and which, I think, received general acceptance, as to post-war credits. The House will find in the Bill provisions for the recording and eventual crediting of post-war credits. The opportunity is taken in Clause 5 of the Bill to meet certain points which were raised in our earlier discussions. In particular, we have made provision for the post-war credit to be divided between husband and wife, either by agreement or in accordance with the methods of apportionment laid down in the Clause. The House will also find that we have provided that the amount which is to be credited to any individual is to be exempt from Death Duties in the event of his death before the actual crediting of the sum involved. The Clause also provides, in Sub-section (4), that any assignment or charge on the amount to be credited or any agreement for such an assignment is to be void. This, I hope, will close the door—I think it will—to speculation in these credits, which, I am sure the House will agree, would be most undesirable and detrimental to all concerned.

Mr. Benson: Can the right hon. Gentleman say whether the credits would be subject to tax as in the case of Excess Profits Tax?

Sir K. Wood: We can come to that in the course of the discussion. I would call attention to Clause 26 of the Bill, which contains far-reaching powers to deal with transactions designed to avoid liability to Excess Profits Tax. The House will see that the Clause is drawn in wide terms, and I think that they will, I am sure, agree with the view which I expressed on an earlier occasion that attempts to avoid taxation obligations in this time of national trial are doubly to be condemned. I have considered with some care whether to take some similar general powers to deal with avoidance in the Income Tax and Surtax spheres. There is, however, a distinction to be borne in mind. In

the case of the Excess Profits Tax we are dealing with a temporary war-time impost where the taxation provisions are very recent, and where we must see that the Revenue authorities are properly armed to deal with any method of avoidance as and when it arises. In the case of Income Tax and Surtax not only do the taxation provisions go back a long way, but there are on the Statute Book numerous detailed Measures designed to close loopholes which have been discovered from time to time by the ingenious tax-avoiders. On the whole, I think it is true to claim that these tax-avoidance provisions, which we have had to insert from time to time and year to year, have fulfilled their object, and as at present advised I do not consider it necessary to arm myself with general powers comparable to those that I am proposing in the case of the Excess Profits Tax. But I want the House to know that I intend to keep this matter under constant review and examination, and if I should be satisfied of the need for wider general powers, I should not hesitate to seek them and to ask for them with retrospective effect.
The only other provision in the Bill to which I would refer is that contained in Clause 37, which provides certain relief from Death Duties in the case of death due to the operations of war. This Clause provides for the extension to civilians whose death is due to injuries caused by the operations of war of relief from Death Duties similar to that given in the case of the Armed Forces, and this relief will be retrospective to the beginning of the war. There are two important concessions involved in this particular provision. In the first place, in the case of successive deaths, for example, a father and son, such deaths being attributable to the operations of war, Death Duties will be chargeable only on the first death. In the second place, where duty is chargeable on a death attributable to the operations of war, the first £5,000 of the estate will be exempt from charge, and there will be partial relief of the remainder dependent upon the age of the deceased and in accordance with the normal expectation of life. The measure of the relief which we are giving is similar to that given in the case of the Armed Forces, and will similarly apply only when the property passes to near relations.
There is one other matter which is not at present dealt with in the Bill but to which I would like to refer. I have received representations from various quarters regarding the unexpected effect produced by high rates of taxation upon various kinds of payments due to be made free of tax. I am examining the whole question to see whether it is desirable or feasible that some amendment of the law in this respect should be made; and I hope to be able to make a statement in the near future. I am advised that, if such action is decided upon, the necessary provisions could be added in due course to this Finance Bill.
In the Budget speech I referred, in connection with our financial problems, to the great assistance that we were receiving from the United States of America, and, in conclusion to-day, I would like to refer to the contribution that the Empire is making so notably to the common war effort in the financial sphere. Australia and New Zealand have to meet heavy expenditure outside their own countries, and they are applying an increased amount of their sterling resources towards these current external war costs. They have, besides increasing taxation, imposed many import restrictions and a number of rationing schemes. They are finding to an increasing extent, as we have found, that the essence of war finance is to do without luxuries and amenities, to spurn delights and live laborious days, so that as large a proportion as possible of the national effort should be directed wholly to winning the war. I discussed these matters with Mr. Menzies when he was here and found that his general views on these problems were just the same as our own. I need do no more than mention the importance of South Africa as the chief gold producer of the world, or of India as the source of multifarious supplies.
I would, however, like to pay a special tribute to the help given to us by Canada, a dollar country, in the financial field. The Canadian Finance Minister, in his Budget speech on 29th April, referred to our very large need of Canadian dollars, and said that these needs up to the present had been met to the extent of about two-thirds of the total by repatriation of Canadian securities and accumulation of sterling balances by Canada, and to the extent of only one-third by shipments of

gold. No gold has been shipped since December, 1940, and the Finance Minister told his hearers that Canada has pledged herself to finance the bulk of British purchases in Canada, which he estimated at £200,000,000 to £300,000,000. This, of course, is a very large sum in relation to Canada's resources. For example, her total Budget revenue, last year, was under £200,000,000, which is to be increased this year by additional taxation, to over £300,000,000. As the House knows, we are obtaining from Canada war supplies of many kinds together with food and raw materials; and we could not obtain these vitally necessary supplies without the splendid help which Canada is ready to give us on the financial side.
In the same Budget speech, the Finance Minister announced a series of wide and substantial tariff concessions on United Kingdom goods. His Majesty's Government have told the Canadian Government that we appreciate to the full the magnitude and generosity of these measures, and I am sure the House of Commons will wish to endorse that message of thanks.
Nor must we forget—and it is as well to look on this side of things to-day—the generous help given to us by the Colonial Empire, by way of direct financial contributions to the Exchequer, as well as in many other ways. Gifts for general war purposes have been reaching us continuously, ever since the outbreak of war. In addition, many Colonies are making us loans, often free of all interest. This help, so freely given, often comes from Colonies with but small resources, and I am sure it is deeply appreciated by the whole country.
Fortified, as I think we are, by this invaluable Imperial co-operation and help, I now ask the House to afford a Second Reading to this Bill. It implements the Budget proposals, which are formidable and unprecedented, but I believe that by means of them we shall be enabled to deal effectively with many of our pressing financial problems, and, certainly, as the whole country is determined shall be done, prosecute the war effectively and unceasingly until victory is attained.

Mr. Pethick-Lawrence: I am quite sure I am expressing the feelings of the House as a whole, in saying that we heartily agree with the


tribute which the Chancellor of the Exchequer has paid to the Dominion of Canada for the generous and wholehearted methods which they have taken to help us in our financial position. We know the people of Canada, with their wide hearts in their wide country, and we acknowledge the great obligation which we owe to them in this respect. Before I come to the details of the Finance Bill, I should like to make a few general observations which seem to me to be appropriate at this juncture of our national affairs. I remember it has often been said of the 1914–18 war that on the international front we won the war and lost the peace. Be that as it may, when we come to the home front and the financing of the home front, I am inclined to think, whether the financial control of this country may or may not have been bad enough to jeopardise the winning of the war, that undoubtedly we lost the financial peace.
I think it is worth while paying a little attention to how it was that our finances in the last war were so bad, in order that we may see how far we have already avoided the mistakes which we made on the last occasion, and in order that we may be quite sure that we do not make the same mistakes in the future. What were the mistakes we made during the last war? I think the first was that we allowed the terms of borrowing to be dictated by the lender and not by the Chancellor of the Exchequer. The House will remember that rates of interest went up and up—I think they reached over 6 per cent. before the war was finished and during the aftermath. In the second place, we failed to attract to the State enough purchasing power to pay for the war. The taxation began too late, and was inadequate. We did not get, what the Chancellor was so careful to lay stress upon, genuine savings as the foundation of our loans. As a result of that, we encouraged what were really sham loans, which did not limit the purchasing power of the people who subscribed to them. In reality they were purely inflationary measures. What were the results of this bad finance during the last war? The first was an inadequate drive to convert peace economy into war economy, and thereby the actual success of the war was jeopardised. In the second place, as I

have already pointed out, there was a steady rise in the rates of interest. In the third place, there was a cumulative fall in the value of money, and fourthly, there was an unnecessarily great swelling of the National Debt.
Those were the mistakes which were committed in this country during the last war, but after the war still further mistakes were made. In the first place, immediately following the war, we allowed an unchecked demand greatly to outrun the supply of commodities, with the result that there was a most unfortunate boom, which was the precursor to many of our subsequent troubles. Then we allowed a few currency cranks, wearing the uniform of orthodoxy, to play havoc with our economy by dragging us back to the pre-war Gold Standard, thereby creating a colossal slump. I pause there to remind the House that a currency crank can be one who wants deflation and, equally, one who wants inflation. I would hesitate to say at the present moment which is the more dangerous. There is no doubt whatever that in the early days after the war we were completely given over to currency cranks who believed in deflation, which brought the direst consequences on this country. The next mistake was that we construed the phrase, "getting back to normal," as meaning a return to an economy that functions only under conditions of scarcity, such as no longer exist in the 20th century. Finally, by failing to deal with the National Debt and by deflation, to which I have already referred, we gave to vested interests a stranglehold on the national life. These were the things we did in and after the last war, and I gather that in all sections of the House there is considerable agreement with the presentation of the facts as I have put them forward.
What have we done, and what are we doing at the present time, to prove ourselves better custodians than those who sat on the corresponding benches during and after the last war? First, let me interpose what in my opinion—and I think I shall get general agreement—are the desiderata of finance during and following a war. During a war I do not think anyone will deny that the object of finance is to promote and establish the maximum conversion of economy from peace to war, and after a war it should be the object of finance to help build up a


stable and lasting economy, not only equal but superior to that which existed before the war began. Let us see, then, so far as we have gone, how far we have improved on what was done before. The Chancellor—and I am using the term in the sense of the holder of the office—has fixed an upper limit to the rate of interest. I say upper limit advisedly, because he has never said that the interest should not fall below 3 per cent. but that this figure was the maximum which was to be paid. The present Chancellor has actually agreed, I think, to put that into statutory form in one instance. That is, of course, an immense advance on the principles which prevailed in the last war, when double that figure was reached before the war was over or shortly after it concluded.
Secondly, during the year in which war broke out and in the present year, Chancellors of the Exchequer have shown that they are not afraid to make drastic inroads on the resources of private individuals and their purchasing power. There was, I think, a slight lapse in 1940, for which I do not think the present Chancellor was responsible, when the demands made on the purses of individuals were not felt to be sufficient, even by the House itself. But we all recognise the very substantial efforts of the Chancellor of the Exchequer in the present Budget and in the Finance Bill which is before us at the present time. With the exception of an hon. Member who recently joined the House and made a speech, I think most of us believe that the Chancellor has gone a long way towards doing what could be done at the present time. The Chancellor has enlisted, and has always stressed the importance of enlisting, genuine savings. Although, of course, there will always be investments in loans in some way, I think that a large part of our investments at the present time do represent genuine savings, and even where they do not they are not inflationary —they are simply reinvestment of capital which has been redeemed for some reason or other.
There is still a good deal of money to be obtained. It is quite a mistake to think that these new taxations exhaust all the money in the country. They do not and cannot be doing so, because the money coming into people's pockets is to a great extent the money the State is spending. The only reason why you cannot take all the money by higher taxation is because

of the differentiation among different members of the community. There are certain members of the community who have large resources which are untapped and which, if they cannot be taken by taxation, can be put at the disposal of the country by actual lending to the nation. There is no reason why, with good will and determination, we cannot reach the whole figure of £200,000,000 or £300,000,000 additional genuine savings to which the Chancellor has referred. We can win the financial war only if we continue, by means of taxation and genuine savings, to cover the whole of the gap which the Chancellor exposed to us in the earlier stages of our financial proceedings.
What about the position after the war? It is essential to take steps to meet it even now. The war may end earlier than some people suppose, and we must avoid the special boom which took place in 1919. A boom is a most natural event. The process of production is slow; it takes a long time to restart, and when a war is over those who have made a great effort not at all unnaturally wish to have a "beano." That is all right if they confine their spending to a limited amount, but if people who have considerable means think they can at once, after a war is over, jump into large expenditure, then we shall have the same boom that we had before, when purchasing power deliberately put into an attempt to buy things utterly outran the means of supplying their requirements. The Government must be prepared to prevent that taking place. Equally, they must take steps to prevent the kind of slump which followed later on. They will, I feel certain, not be given over to the currency cranks who want us to go back to the Gold Standard, and they must see that in other ways we do not get deflation. It cannot be said too often that deflation is no cure whatever for previous inflation, in the same way that it is no cure for a person suffering from a burn to put him in a pack of ice. Inflation and deflation are two separate evils, and the imposition of the one does not help to get over any ill-effects which have arisen from the other.
Thirdly, the Government must see that we do not get this stranglehold of vested interests. That is very liable to occur unless steps are taken to prevent it. On


the last occasion on which we discussed finance, I told the Chancellor of the Exchequer that I hoped the Government would make some pronouncement as to what they would do after the war, and I suggested that they might announce that they were in favour of a levy on capital. Since then I have received letters from a number of people who look upon me as a "kill-joy" who wants to destroy the little wealth there is in the country. I am not in the least desirous of destroying people's enjoyment, but I am thinking of the nation as a whole, and I realise that, in some shape or form, the country and future generations will have to be freed from the millstone which will hang round their necks if vested interests and the immense amount of war debt have to be met by the new generation.

Mr. Craven-Ellis: Would not a capital levy be deflation? The right hon. Gentleman has been saying how injurious deflation would be to the country, and now he is winding up his speech by advocating a capital levy, which is one and the same thing.

Mr. Pethick-Lawrence: I am afraid I am not yet winding up my speech. I do not agree with the hon. Member that a capital levy is necessarily deflationary. The two things are not by any means necessarily connected.

Mr. Craven-Ellis: How would the capital levy be applied?

Mr. Pethick-Lawrence: It would take up too much time if I went into the matter at any great length. I simply want to put one point to the Chancellor of the Exchequer. The Chancellor must begin to think how he will deal with the enormous debt. Already the gross amount is nearly £12,000,000,000. To that one has to add all the cost of finishing the war and clearing up the mess of the war afterwards; the Chancellor is to pay 20 per cent. to the Excess Profits people and he is to pay something back to the Income Tax people; and in addition, we shall have in front of us the immense task of dealing with the international and internal situation after the war is over.

Mr. Hammersley: Am I to understand that the right hon. Gentleman is now advocating a capital levy on

similar lines to the capital levy advocated by the Labour party after the last war? I gather he is not advocating a duty on the increase in war wealth, but a capital levy on the whole of the capital.

Mr. Pethick-Lawrence: I explained on the last occasion when I dealt with this matter that I thought a capital levy on the increase of war wealth would be a very trivial affair and one that would not be worth attempting to carry through. But if the Chancellor rejects my proposal, what is the programme of the Government? I think it is time the Government told us a little bit how they envisage the future. It is too early to have details, but the Government must face the problem and not simply drift into a position without facing the facts. Finally, the financial system has to help to create an economy that will face up to modern conditions. We cannot merely go back to the pre-war economy. That was based on the 19th century conception of scarcity. The essential element in the 20th century is potential plenty. Every head of a business knows that it is not production, but sale, that is the problem, and it was that which, in the early years of the 20th century, and more particularly in the years between the last war and the present war, put the check upon production. We can produce in abundance. The financial system which follows this war has to be relevant to the new economy.
I have taken longer than I intended in speaking on the generalities, and I shall not detain the House for more than a few minutes with regard to the particulars of the Finance Bill. Most of the points are really Committee points. We have discussed already on the Budget Resolutions the Bill as a whole, and the great major issues of the Bill; and the points to which the Chancellor has drawn our attention, important as they are, are mainly Committee points. There is the very important provision to check evasion of the Excess Profits Tax. The Chancellor has done very well to insert that provision, and I hope we shall have a chance of discussing it in detail at a later stage. I think he has done very well in extending the provision concerning relief from Death Duties to the case of civilians and not only to the military population. I was interested to hear his point about the effect of the Income Tax on sums which are, by


contract, arranged to be paid free of tax. I had had that point brought to my attention and I was hoping that the Chancellor would say something about it. I think that, among other things, it applies to mortgages in certain cases. There is one other matter which was referred to in earlier Debate, but on which the Chancellor has not so far seen his way to make any concession, and that is with regard to Income Tax and travelling expenses. I can quite understand that the right hon. Gentleman may not see his way to deal with that on any large scale, but there has been brought to his attention the case of people who arc blitzed out of their homes, who normally have no travelling expenses, but are forced now to reside some distance from their work and to travel to it at some considerable expense to themselves. I think he should give that matter consideration, as I think he promised to do, and see whether something cannot be done for such people.
I now reach my concluding remarks. In the main, the Bill is a thoroughly sound Measure. It is horribly inconvenient to everybody, but we all recognise that we have to pay this bill in order to win the war, and everybody, in all parties and throughout the country, is determined to win the war, and to win it handsomely. I have, in my remarks, ventured to impress upon the Chancellor that he has to begin thinking of the future, because, avoiding as we have done a very large number of the mistakes that were made during the last war, we have also to avoid the mistakes which led to very serious consequences in the years after the last war. We have to win the financial peace just as we have to win the financial war.

Mr. Clement Davies: I should like to join with the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) in expressing our gratitude to the Dominions and Colonies for their most generous action in regard to men, material, and now, finance. Without making any distinction between any one of the Dominions or the Colonies. I want to express our tremendous gratitude, and also to say that their enthusiasm heartens us and that we look with gratitude to all that they have done, and look forward with equal gratitude to all that they are undertaking to do, on our behalf.
In ordinary times of peace, the Budget is the measure of the Government's activities in social reforms and such provision as they have to make in preparation for defence; but in war time, the Budget and the Finance Bill provide the measure of the nation's war effort as a whole. The Chancellor of the Exchequer proposes to raise £1,800,000,000 in taxation and £1,900,000,000 by loans from savings, and another £500,000,000 from the Dominions, making a total, all told, of £4,250,000,000. That is not all devoted to the war effort. £700,000,000 of it goes to ordinary purposes connected with the running of the country, reducing the amount to £3,500,000,000. Then one has to deduct from that £3,500,000,000 a sum of somewhere about £150,000,000, which is the expenditure on subsidies to keep down prices. So the actual war effort is measured at the rate of £3,350,000,000. I am going to make three points with regard to that: (1) It is not enough; (2) the Bill, in spite of taxation being so heavy, will not prevent inflation; and (3) it inflicts unnecessary hardships.
With regard to my first point, I was glad to hear the Chancellor referring to the tremendous efforts which we now have to undertake. We are now entering the fourth phase of the war. The first period ended with the fall of Poland and the agreement between Germany and Russia. That gave Germany security upon her Eastern fronts. It gave her valuable coalfields, looted foodstuffs and added to the plant, machinery, industries and various ores which she had already obtained from Czechoslovakia, and it also gave her some 2,000,000 or more slaves to work upon her food production. The second phase ended with the collapse of France, and that gave her more industries, more machinery and more plant and loot from five countries—Norway, Denmark, Holland, Belgium and France. It gave her much needed bauxite, iron-ore, coal, looted steel, food and shipbuilding material, and it gave her bases for aeroplanes and submarines so as to enable her to prepare for the blockade of this country. The third phase has just ended with the conquest of Greece, and (hat gave her further security on her South-Eastern borders, added to her loot and gave her the agricultural products of all the countries under her dominion— Hungary, Rumania, Yugoslavia, Bulgaria and Greece—and gave her access to the Eastern Mediterranean. It added vastly


to her fuel-oil resources, which she can now bring partly by sea, partly by road and partly by rail and has put her in direct communication with Turkey, so that one can get some of the much needed ores, such as chromium, which Turkey can give her. So we are entering now on the fourth phase. A drive through Syria, Iraq, Palestine and Egypt is now beginning, and there will be, of course, increasing efforts in the Atlantic battle from Dakar to Norway to try to block our sea routes, to put a stranglehold upon the jugular vein through which flow food, munitions of war, materials necessary for our defences and for our very existence.
I have gone through all this to show that it is necessary for us to put forward our full maximum effort. We must mobilise our full maximum strength. We are not yet pulling anything like our full weight. It has been estimated that we have not yet exceeded 60 per cent. of our potential war effort, or potential strength. What are the comparative figures? We know that in the six years prior to the outbreak of war the amount spent in preparation by the enemy was £6,000,000,000, compared with our expenditure of £1,200,000,000, and that their expenditure put them in such a position that production could go at full flow, whereas a very large part of our expenditure since the outbreak of war has been in the preparation for production. But what is the war effort of Germany to-day? We have not the very latest figures, bur we have the figures for the last quarter of 1940, and we know that in that quarter her expenditure was at the rate of £5,500,000,000 per annum to £6,000,000,000. The figures come from various sources and are checked by various statistical departments, and I challenge anyone to say that they are incorrect. [Interruption.] I will not take up time by going through them again. I had the same controversy exactly 12 months ago, when we were able to give the comparative figures for that time, when all that was being proposed by the then Chancellor was a war effort at the rate of £2,000,000,000. The hon. Member agreed with me that that was not enough. I am saying again to-day that it is not enough. That is without reckoning loot and without reckoning Italy's contribution.
Our amount is £3,550,000,000. We can reckon the Dominions at another £800,000,000, and America is put at £1,000,000,000. Add all this together for the coming year—a total of £5,150,000,000. The American contribution will not be limited or governed by her capacity or her willingness to make or to lend but by the power and capacity of the ships to transfer to and land the goods in this country where we need them. Our effort is not enough. There are deficiencies in it and there are deficiencies in our munitions production, in our food production, in our shipping production and particularly in the user of our shipping capacity. We have to mobilise all our wealth, all our property, all our interests and all our man-power. Everything is in the balance to-day, and all should be put in the scale on our side without fear and without favour. Our property in any event is at stake, but, more than property, our life is at stake, and, more than life, the very liberty of the individual and the liberty of the community are at stake.
My second point was that the Bill, in spite of the taxation being so heavy, would not prevent inflation. The Chancellor wants to raise £3,700,000,000. He estimates that he will get by taxation £1,800,000,000, and out of people's savings he will be able to borrow £1,900,000,000, and so avoid inflation. But will he deny that there has been inflation already? Will he deny that there has been a tremendous consumption of stocks which have not been replaced? And will he deny that we have been eating into capital, and partly living upon our capital? Last year he borrowed £1,550,000,000. How much of that was inflation money? It is estimated by those whose duty it is to go into these figures that the amount of inflation contained in that £1,550,000,000 was of the nature of some £400,000,000.
In spite of that and the increased taxation from £1,500,000,000 last year to £1,800,000,000 this year, the Chancellor estimates that he will increase the so-called savings from £1,550,000,000 last year to another £1,900,000,000 this year. He estimates that he will get this extra amount because of extra wages and earnings. It is true that there are increased wages and that more people are being employed, but unessential commodities are to be lessensed, industries are to be concentrated, manufacturers are


to be limited in their output, and some will have to be closed down altogether. With that the profit-earning capacity of the people concerned will go. On top of this comes an extra taxation of £300,000,000. All these matters will lessen savings and not increase them. A part of the £1,550,000,000 last year were transfers from one security to another. That is even taking place today. There was a statement in the papers only this week that one company in London has transferred £5,000,000 towards this new savings effort. Is it to be suggested that that £5,000,000 was tying idle or that it was not invested in some other form?

Mr. Molson: In cases where there is a transfer of that kind, is it not the case that there must be some saving? If certain investments are sold in order to effect investment in the War Loan there will be a genuine saving.

Mr. Davies: My hon. Friend has missed the point. It does not mean increased savings. It means that savings in one form have been transferred to another form. It does not add to the savings which the Chancellor requires. Part of the £1,550,000,000 consisted of money which was invested abroad which the Government took and for which they paid sterling to people in this country, who could not do better than invest it again in the Government. I am certain from my experience throughout the country that part of the loans made in war weapons weeks were lifetime savings which cannot be repeated this year. Finally, stocks have been heavily depleted and not replaced. That reservoir is running down. Men everywhere are using up capital and the reservoir is limited in its capacity. In my calculation the Chancellor will not get the £1,900,000,000 savings that he requires. He will get it only by inflation, which is always nature's cure for the inevitable wounds caused by bad finance and bad economics.
My third point is that the Bill inflicts unnecessary hardships. Taxation is at a level which kills individual enterprise and destroys any sensible plan for reconstruction. May I give one instance? The difference the Government draw between the investment income of the rentier and the earned income of the entrepreneur is

negligible. In the higher ranges it is practically nil. On pages 14 and 15 of the White Paper issued with the Budget the amount of taxation on earned income and investment income is shown. On £2,000 earned income the taxation will be £850 and on investment income £931. On £3,000 earned the taxation win be £1,462 and investment £1,537. On £5,000 income the taxation is £2,837 and £2,912 respectively, a difference of only £75. That means that no distinction is being drawn between enterprise and the good fortune to be in possession of investments. That means the death of enterprise and individual effort. No allowance is made for those who labour on a decreased income and have to carry obligations which were incurred in the pre-war period. The effect of this increased taxation and of the effort to keep going by living on capital, which many are doing, eating into and depleting their stocks, will be to reduce working capital. We cannot reduce working capital indefinitely without endangering the continuity of production; and by endangering the continuity of production we endanger the continuity of our war effort. The Bill, therefore, inflicts unnecessary and, indeed, damaging hardships, damaging upon the individual primarily, but damaging also upon the whole community.
Last year I indulged in three prophecies. One of them was wrong. It was that that would be the last Budget of the old financial kind that could or would be introduced. A Budget introduced on the old traditional lines suitable for peace-time is unfitted for a total world war of this colossal magnitude. The Chancellor has introduced a Budget on the old lines. I say that he will not get the money, that there will be inflation, that that inflation will increase, and that the Bill introduces unnecessary hardships. Far more important is the fact that our war effort as disclosed by this Budget is not enough. The Budget and this Bill should provide an economic solution and be based on central economic planning which would mobilise every one of us to do our best and to do that best in the most useful way. We should be put in the position where our best efforts can be put forward. Property should all be mobilised to this one end.
What should we do? In the first place, we must conserve our shipping space to the absolute essentials. In the second


place, we must manufacture substitute articles wherever we can do so in this country. In the third place, we must get out of our land what it has got in raw materials, such as iron ore and timber, but especially must we get all we can in the shape of food. In the fourth place, we must cut down our consumption to the bone and so free labour for the essentials of our war effort. In the fifth place, all articles ought to be completely rationed. All consumption commodities, food, clothing, boots, shoes and things of that kind, must be rationed. All other articles which absorb material or labour that can be diverted to the war effort should be rationed directly or expenditure on them should be rationed. What would be the effect of doing this? I have calculated that it would provide a sum in savings alone of some £2,500,000,000, and that without any danger of inflation.

Dr. Russell Thomas: Does my hon. and learned Friend propose that 3 per cent. should be paid on those savings or that the money should be just taken?

Mr. Davies: It would be actual savings of money which people could not spend. It would be better that people should be asked, as they are now being asked, to give it to the Government. There is a way of giving it to the Government without interest, and people are doing it not by actually lending it to the Government but by not using it in consumption. They are benefiting the Government more than the people who ask for the payment of interest. 'It would put all of us on an equal footing so far as commodities are concerned. Thirdly, it would have an effect upon the morale of the people, because one would not be getting privileges which were denied to another, and at last we should be all on an equal footing. In the fourth place, it would ease our shipping problem and enable us to plan our imports properly so as to make the very best use of them. Fifthly, and this is the major step that is required for economic stability, we should have mobilisation of labour and a proper wages policy. Lastly, and probably even more important than all these, it would have a tremendous effect upon opinion in America and in the Dominions because then the people there would realise that we are showing determination not merely

in words and in spirit but in actual action. We should be putting every ounce we can into the scale, and our action then would be such as to make them realise that we are determined to go on, and that by that determination we shall win. The enemy is straining every nerve and using all the means in his power. Shall we do less? Can we afford to do less? Can we dare to do less? Is there any man in this country or in the House who desires to do less? I think the unanimous answer is, "No."

Sir John Wardlaw-Milne: I think the House must feel grateful for both the speeches which we have heard following that of the Chancellor of the Exchequer. The right hon. Gentleman himself also must, I am sure, be satisfied with the reception which he had when he introduced the Budget some little time ago. It is well however that there should be some criticism of the Finance Bill, not only because of its many far-reaching provisions but also because I do not feel that it would be good for my right hon. Friend if he never encountered any criticism at all and was unable to sharpen his debating powers upon those criticisms which he might expect to receive in Budget Debates. The hon. and learned Member for Montgomery (Mr. C. Davies) has made some interesting suggestions, and I must agree with him when he says that inflation is already taking place. I am afraid that those who watch these matters carefully can have very little doubt that that is the case. I do not say that it is inflation that is out of control. A good many people would agree that it is impossible to win this war or, indeed, any war without some form of inflation. Inflation is inevitable, and the whole problem is whether we can control the inflation which is bound to follow from an outbreak of war. If it is the work of the Government, as I see it, to try to control that inflation, to do that they have to consider not only the question of curtailing consumption, which is a very important thing in itself, but curtailing consumption in such a way as will release productive resources for the war effort, because if they do that second thing they will, in fact, have achieved the first, and to a large extent secured the control of inflation.
The White Paper shows some extremely interesting figures. I think the Government have already been congratulated in previous Debates upon the fact that that White Paper was produced. It was a very excellent move in our financial procedure. The White Paper shows that between 1938 and 1940 the national income increased by more than £1,100,000,000, but to my mind the interesting point is this, that, of that increase, profits and interest accounted for £336,000,000 and wages for £663,000,000. I want the House to notice those two figures, because to my mind they are fundamental when we are considering what are our present problems. Before I come back to the difference between these two items let me direct attention to another paint. During this period direct taxation increased by £376,000,000 and indirect taxation by £225,000,000. It is well known that wages bear only a small part of direct taxation, and a part only, but a much larger part, of the indirect taxation. Profits and interest bear the largest share of the Income Tax, naturally, the whole of the Excess Profits Tax and most of the Surtax and Death Duties. I am sorry to have to go through all that, but it is to bring out this point, that it is quite clear that the largest increase in free income has accrued to the wage earners. It should do so, and I do not quarrel with it at all, but the fact is that it did, and if inflation is to be controlled then the Chancellor of the Exchequer has two courses open to him: either he must tax wages further—let us face it—or else he must control any excessive rise, particularly of an unequal character.
When the Chancellor was speaking earlier to-day I was very glad to hear him emphasise the necessity of controlling waste and that it is personal waste in addition to national waste which has to be controlled. The chief increases in taxation in this Budget are being imposed upon people who are quite unable to curtail their consumption any further—I am speaking in general terms, but to any large extent they are unable to do so; and if they have to live on capital, as some will have to do, that, of course, releases nothing to the Government, and helps the Government in no way at all. It comes back, therefore, to this proposition, that one of the difficulties we are

in to-day is that we have no control of-wages at all. The last thing of which I want to be accused, and I hope I shall not be, is of making an attack upon wages. That is not my point at all. I am not considering what a man earns; what I am thinking about is how the country is going to meet the bill and avoid inflation. The uncontrolled part of the bill is the wage rate. Make your minimum standard of wages whatever you like— I have no quarrel with that at all—but what you must do if you are to win the war is to control the expenditure in some way, just as you are controlling the earnings of capital and controlling enterprise. It is fundamental to the problem of to-day that we should have a proper wage policy, not necessarily involving either a cutting down or an increase in wages; but whatever it is, let us have a definite wage policy on which the Government can base their financial policy, without which they cannot win the war.

Mr. James Griffiths: I do not for a moment deny that there is a problem of a proper wage policy, but it would be interesting sometimes if we could hear from hon. Gentlemen opposite what they mean by a proper wage policy.

Sir J. Wardlaw-Milne: I will try to explain, without going into too much detail. In this country at present, a vast number of people have been brought into industry and are working for the Government. You may say to-day that almost everybody is working for the Government. In addition to that a large number of people have been conscripted for the service of the State. There is no quarrel between those two branches where they actually start. A man is conscripted to work for the war effort in the Army, on a comparatively small rate of pay, and he understands that that is his obligation to the State. As you gradually increase, as we are doing, the earnings of those in munition factories, you steadily increase the difference between the earnings of those two sections of the population and that is dangerous, to begin with. It has a dangerous effect, because men begin to object to their fellows getting a different rate of remuneration from themselves.
The second difficulty which arises, without a wages policy, is that you have two sets of people paid different wages for


doing practically the same work—not necessarily the identical work but the same class of work—and, as the pressure grows, and it will grow steadily, on every human being in the country to give service to the State, there is increased demand in respect of payment for essential work. Every employer working for the Government is now almost without interest in the question of what the rate of wages should be. The result is the absence of a normal opposition to an increase in wages. Let us leave aside any prejudices or questions that have been raised in the past. When every employer has to produce goods on competitive terms, the natural desire is to cut down charges and costs, because otherwise the business cannot pay in competition with those in the same trade. To-day, it is a matter of indifference to the employer what his costs in wages are, because the State is paying. The consequence is this growing snowball of rising wages and rising costs. In itself it would not matter, if it were not for its effect, which, combined with an increasing scarcity of consumer goods, is an inflationary one, upon the national effort.
The real object of the Chancellor of the Exchequer to-day is not simply to raise money. I remember discussions in this House during which a former Prime Minister spoke of the necessity of having cottages for everybody at 10s. a week. What utter nonsense. It is no use talking about 10s. a week. It does not matter what a man pays for his cottage provided he earns enough to pay the rent as a reasonable portion of his earnings. Therefore, the real business of the Chancellor of the Exchequer to-day should be not only to find money—which is comparatively simple—but to maintain its value. If he does not maintain the value of money, the increased wages are merely a snowball movement from which the people who earn the wages are no better off. In fact, they are worse off. It is essential that the Chancellor of the Exchequer should devote his attention not to the prevention—because it cannot be prevented—of inflation but to the control of inflation and to maintaining the value of our money. This can be done only if he has some definite form of wage policy in the same way as he controls other forms of expenditure.

Dr. Russell Thomas: For a controlled wage policy such as is suggested you must have complete control of the prices of commodities.

Sir J. Wardlaw-Milne: I am just coming to that point, if the hon. Member will allow me. I entirely agree. Any inflationary movement is caused by the increased expenditure of the State, aided by a diminishing supply of goods. When the individual consumer cannot spend his money in the usual channels but concentrates on a reduced supply of goods, one of the great dangers of inflation is on the move. I want to point out to the House that the real lesson is not only for the present but for the future, because if the goods which the consumer wishes to buy cannot be created in sufficient quantities, there will be just as much danger then as there is at the present time. In fact, the danger of inflation may be with us in an even more definite form after the war than it is while the war is being waged.
In his Budget speech, the Chancellor of the Exchequer dismissed with slight reference the large sums of money that have been spent abroad. I mention the matter because it will probably come up during the Debates upon the Finance Bill. He indicated that those purchases were financed largely out of reserves and that they had little inflationary effect at home. I wondered whether that was wholly true. The individual holder of any foreign investment has to be compensated in sterling, and this means new money. If that new money goes, as perhaps some of it does, into Government securities and is not spent on consumer goods, little harm may be done, but normally—and here, again, I follow my hon. Friend opposite —that money would go into investment in industry or trade and, much more likely than anything else, into the provision of exports. But exports can be increased only by diverting labour from home production. This cuts down the supply of goods here, and again results in a further inflationary effect upon prices.
Spending at the rate we do abroad at the present time, we must, in the end, depreciate the value of sterling in terms of other countries. That, again, puts up the prices of everything we buy from non-sterling countries. This is not a problem of the moment perhaps, but it is one that cannot be ignored because we are bound to face it, not only after the war but


possibly before the war ends, and the solution will to some extent depend upon the nature of the settlement of our purchases from America. The repayment of this 20 per cent. bonus, less tax, whatever may be the rate at that time after the war, is a good move. This reduction of E.P.T. by repayment after the war may have far-reaching results in connection with our future Budgets. The principle adopted there is one to which, so far as I know, the Treasury have never shown any desire to adopt in previous years with similar forms of taxation.
There is no adjustment in this Budget of the burden of taxation between those whose incomes are already charged with very heavy and definite commitments from which they cannot possibly escape and those who spend their incomes as they please. My hon. Friend gave very interesting figures showing the taxation as between the rentier and the entrepreneur. There are other difficulties in the present demands. There is the fact that the taxation makes no differentiation between the man and woman with very large commitments and quite unable to get out of them, war or no war, and those who have few, if any, commitments at at all. That is an aspect of taxation which, sooner or later, the Chancellor of the Exchequer must take into account. The simplest example is the difference between the married man with a large family and a bachelor. At the present moment, there is nothing in the Government's proposal to show that they pay any attention to those differences of liability under which various citizens labour. Clearly, one of the ways of dealing with matters of that kind is the much discussed question of family allowances. Probably that is one solution into which the Government will inquire. The well-to-do man has, of course, to eat the same kind of food, to buy clothes, furniture and other things as the man who is less well off, and in those respects they should be rationed equally and drastically. There is no other way in which we can succeed except by the most stringent rationing of all sections of the population equally. But that does not alter the fact that there are people who have large expenditure to face in the way of wages, upkeep of houses and so on, that they cannot possibly avoid, and as taxation stands at present no account is taken of that.
I do not want to weary the House with details, some of which could, I think, best be dealt with when we come to the Committee stage, but I have been a little concerned with the amount of discussion I have seen in the Press on the subject of savings. The progress that is being made is very remarkable and we must all be very glad that it is growing so rapidly. But the criticism is sometimes made, and rightly made, as to how much of these savings are real savings. Not even the Chancellor of the Exchequer can answer that question. It is one of the most difficult questions before us. I sometimes wonder, when I see that the Government borrow money from the banks, whether it is really in the national interest to pay the banks a higher rate of interest than they would otherwise get, which is, after all, what we are doing, and whether it is very sound finance to pay three per cent. for money on which the banks would otherwise obtain only a half or one per cent. These are questions which it is very difficult to answer. We do want real savings — every penny, from everybody —and it is a matter of congratulation that the campaign has been so successful. I join, however, with my hon. Friend opposite in saying that I do not yet see on the part of the Government any planning ahead to deal with the problems of finance which this war will call forth. I congratulate the Chancellor on the way the Budget has been received and on the happy way in which everyone has reacted to being taxed more and more. But we have got to look ahead. We can do a great deal by the elimination of waste. There are two ways of realising this objective, to raise the money or not to spend so much, and I am delighted to hear his remarks on that second aspect of the subject.
Immense sums, however, have to be raised, and the question is, Can they be raised by ordinary methods at all? That is the real problem facing the Chancellor. To finance the war we must maintain the value of sterling by controlling inflation so far as we possibly can. We can only do that by rationing far more strictly than at present, and by a wage policy which, whatever it may do in the way of providing good wages—and nobody is against that—will prevent inequalities the result of which will destroy


our own policy. I am very much afraid, from what I see of Government factories, that much effort is still wanted throughout the country to win this war. If I were asked to make a statement, or to make a guess, as to the extent to which the country is behind the war, I should say that psychologically it is 100 per cent. behind it. But in regard to working for victory it is not yet a 100 per cent. effort. It is nothing like it, and I should say that this country to-day is not working more than 75 per cent. of the extent to which it ought to work. Something is needed from the Government to bring about the extra effort required— not only the control of expenditure, which is essential, and a real cutting down of personal and Government waste. That is essential, but behind that there should be a policy which insists that every man and woman should do their utmost by compulsion if necessary, while all that they may expect in return is sufficient to enable them to carry on until the day of victory.

Mr. Benson: As usual, we have had an interesting speech from the hon. Gentleman who has just spoken, but I should like to point out that high as our taxation is, on the vast majority of the ranges of income it is still sufficiently low to allow all that variation in commitments of which he spoke. I will not say that that applies to the very highest ranges, but to the majority of income ranges it does, and it is the existence of that variation of commitments which prevents the Chancellor from putting up taxation to what one might describe as the logical level.

Sir J. Wardlaw-Milne: I do not quarrel with that, I agree, but at the same time it is only fair to remember that some of those commitments are pre-war.

Mr. Benson: It is because of those commitments that the Chancellor still does not take more than 10s. at the £4,000 level. I think the problem which we have to face is primarily a problem of savings. The Chancellor has fixed taxation, and I hope we shall not have to indulge in a second Finance Bill this year. He is now looking to savings to fill in a very large gap. He has made various interesting calculations and has concluded that the final gap which will have to be filled in is approximately £500,000,000 of additional savings over and above what we

have done in the previous year. It is a very large sum. I think this matter is one to which we ought to address our minds more logically than we have done in the past. During the Budget discussion my hon. Friend the Member for East Middlesbrough (Mr. A. Edwards) and myself ventured to offer some criticism of the way in which the Savings Campaign is being run. We criticised War Weapons Weeks, not on the grounds that they should not be held, but that their method could be improved. Our criticism was that War Weapons Weeks are aimed primarily at the collection of private savings, as industrial savings come to the Chancellor of the Exchequer automatically, and that, therefore, to include in War Weapons Weeks totals what I might call industrial money, the reserves of companies waiting for investment, is entirely wrong. It confuses the issue, and gives an entirely wrong impression of the result of the War Weapons Week and of the effort which is required to maintain the rate of savings.
Further, the habit of making a target for one particular week is wrong, and the target is fixed upon an entirely inadequate basis. Very few targets are fixed unless the organisers know that they are going to get a great deal more. I know of one small place where they fixed the target at £2,000. They already had an industrial cheque for £2,000 in their pockets. That is not fixing a real target. But the main point is that our effort must be an annual effort. There must be 52 War Weapons Weeks in a year. It is not the violent spasmodic effort of one week that will bring in the money which is required. One should announce to the districts, not a target for one week, but the amount which they should raise each week for 52 weeks of the year. That would give some indication of the real task which confronts them. The impression given when a district has surpassed its target for a War Weapons Week is that it has done magnificently. So it may have; but it is a very dangerous thing in war-time to give people the impression that they have done more than is demanded of them.
As a result of those criticisms of ours, which were intended helpfully. Lord Kindersley has broadcast what he calls a complete reply to "the ballyhoosters" —because, I think, my hon. Friend and I used the term "ballyhoo" His reply


is that in 1940 the average of small savings was 4s. 8d. per head per week. In the 132 War Savings Weeks it jumped to £3 17s. 3d. for the districts concerned, which produced in small savings a sum of £22,500,000. That reply is very disturbing—at least, it disturbed me. To begin with, it is extraordinarily inept. It is no reply at all to our criticism. Lord Kindersley evidently has completely misunderstood the criticism. We did not want to stop his War Weapons Weeks. We only wanted to improve his methods. What is more disturbing still is that Lord Kindersley apparently has misunderstood the objects of his own War Weapons Weeks. The amount raised in any one week is not important—at least, it is fractionally important, as compared with the amount raised over a whole 12 months. While the Chancellor asks for small savings amounting to £500,000,000 to £700,000,000 a year, Lord Kindersley broadcasts the statement that he has made a complete reply to his critics because War Weapons Weeks have raised £22,500,000. Lord Kindersley is quite out of touch with reality. But, thank goodness, he has a competent staff of people who know their jobs. The staff that runs the War Weapons Weeks have no illusions about the importance of their targets. They spend their whole time in the districts where there are War Weapons Weeks, doing the real thing, organising a machine for permanent collections. The War Weapons Week is not important.

Sir K. Wood: It is a start.

Mr. Benson:: Yes; it is a very good advertisement. But Lord Kindersley is under the impression that he has given a complete reply to the critics who suggest that the War Weapons Weeks method is not entirely adequate. I suggest that we should direct our publicity to the real problem, which is the annual amount of saving in a given district, not the amount for one special week. It is not a complicated matter to calculate roughly what any district—an agricultural district or an industrial district; a wealthy city or a depressed area—can and ought to produce in private savings in 12 months. The whole of our publicity in that district ought to be directed to telling our people what they must do. The war weapons week is a first-class advertisement. It gets the people interested. It gets the savings

groups going. But the people should be told what they are to do during the next 12 months.
This problem of saving is so important that I hope the House will bear with me when I analyse the problem. The Chancellor in his Budget speech referred to £500,000,000 to be provided by savings. To-day, he spoke of real savings of between £200,000,000 and £300,000,000. I am not sure where the balance is to come from, whether from unreal savings or not; but the real savings which we have to get in this coming year must amount to a very large sum. They cannot come from industrial concerns. Excess Profits Tax, which has already been discounted in the Budget, will see to that. There is no possible increase from industrial savings: the money must come from the private individual. We can rely on little from the rich. For many years the rich have ceased to be a source of national saving—probably because of the increasing rates of taxation in the higher ranges of income. The recent very heavy increases of taxation on the higher ranges will prevent any more saving coming from that direction. Take the Surtax payer. The Chancellor's predecessor told us in 1940 that after Surtax payers had paid taxation, the total income left to them was £260,000,000. The Chancellor has in this Budget imposed upon them anything up to a further £70,000,000 of taxation. In addition to that, the War Damage Contribution will be a fairly heavy levy. The total amount of income left to the Surtax payer will be considerably less than £200,000,000. The commitments referred to by the hon. Member for Kidderminster (Sir J. Wardlaw-Milne) and consequent disinvestment will entirely discount any real saving from that source. We have to look the facts in the face. The source of savings must be the working-class and middle class in this country. That may or may not be a pleasant fact, but one must look the facts in the face, and these are the facts.
There is a very strong counteracting influence which works far more steadily and radically than appeals and propaganda, and that is the instinctive desire upon the part of everybody to maintain the standard of living to which they have been accustomed. Hon. Members opposite in past Debates have often referred to the importance of gain as an incentive. The desire to improve the standard of living


is nothing like so powerful an economic motive as the desire to maintain the existing standard of living. Many years ago Webb pointed out that strikes were far more readily undertaken to protect the standard of living than to gain an increase in that standard. This instinctive desire to maintain that to which they have been accustomed is the main difficulty in attracting savings. War means a reduced standard of living for everybody, and you cannot get away from it. It is a reduction in the standard of living just at the time when the majority of the people in this country are handling more cash than they have ever had before. You get that contradiction which it is difficult to drive into the heads of the people. A large number of things we require are drastically rationed, and a large number of other things have completely disappeared, but with the instinctive desire to maintain the standard, you have the housewife making desperate efforts to obtain some alternatives to what she has been accustomed hitherto in order to make up for the commodities which have been rationed or have completely vanished from the market. You find that these alternatives, themselves in short supply, have risen in price infinitely more than the normal constituents that go into our cost-of-living index. I have not made a deep or detailed examination of prices. But there were three prices which I happened to notice last week. Lettuces were 1s. each.

Mr. Spens: Spring lettuces.

Mr. Benson: Spring lettuces, if you like, at a shilling each. Tomatoes were 7s. a pound. They are among the two alternatives that are available. I also saw that venison, which was difficult to sell at 8d. a pound before the war, being a very unpopular meat in this country, was being sold at 2s. and 3s. 6d. a pound, a clear case of profiteering. The point is that the people trying to keep up their standard of living and having far more cash available than that to which they were previously accustomed, naturally force up the prices of these things. That is the problem. It is not the problem of the staple or rationed articles but the alternatives for which everybody is searching. If we are to solve our savings problem we shall have to stop this leak in the family budget, which is due to the need

for purchasing unregulated alternatives to the normal standard of diet and consumption at very high prices. It does not take very much to wipe out a wage of £4 a week in view of the present prices that one has to pay for what are very nearly necessities. The right hon. Gentleman is spending a very large sum of money in subsidising staple foodstuffs to keep down prices. Such subsidies, now amounting to nearly £100,000,000, will be wasted if the prices of subsidiary and alternative foods are allowed to rise without any check and control.
I admit that there is no simple remedy for this state of things. All the alternatives are in short supply, and if we are to keep down prices, it can only be done by a very much wider system of rationing and a more drastic system of price control. I am not looking at this matter from any other point of view except that of the flow of savings. You have to prevent two things—undue purchases and purchases at undue prices—and that can only be done by drastic rationing and price fixing. There is no simple solution to this problem; and the Chancellor of the Exchequer is not going to get a simple, broad solution. It is a question of unremitting attention to innumerable details. In the fixing of prices he will be up against one very serious snag, and that is the chaos in our distributive system. The distributive system, with the labour employed, has expanded during the past 20 years out of all recognition. There has been a larger expansion in the number of people employed merely in distribution in the past 20 years than has been the case in any other industry. This chaotic overgrowth of distribution was a heavy burden on the community in time of peace, but now, with an enormous reduction in the quantity of goods to be handled, the burden has grown out of all proportion. It has to be tackled.
The right hon. Gentleman the President of the Board of Trade is hard at work producing schemes for the concentration of production. If the Chancellor of the Exchequer is to obtain the savings that he requires, he will have to see to it that there is a great deal of concentration in distribution in order that he may be able to fix prices which will be reasonable to the consumer, leave a margin for savings, and give an economic return to the distributive machine. If the Chancellor does not do


that, the multiplicity of middlemen and the inordinate number of shopkeepers are simply going to eat up the money which ought to be flowing into the Exchequer. In the case of controlled foods, a good deal is being done. For example, before the war there were 18,000 slaughterhouses in this country, and now exactly the same work is being done by only 800. Some similar steps will have to be taken with regard to the distributive machinery as a whole, unless, as I have said, we are to allow the money to be eaten up which ought to be flowing as savings into the Exchequer. It is this lack of regulation and control which is the big hindrance to efficient saving. I hope that I have not bored the House with very obvious remarks and a very obvious analysis of a very obvious problem. The fact that the problem is not being tackled is my defence.

Mr. Denman: Every section of the House will wish to join with the Chancellor in gratitude to Canada for the efforts she is making, and for the munificent proposals he has mentioned to us. Perhaps nothing better can be said on the subject than to say that it is exactly what we should have expected from our Allies and friends, so wholeheartedly with us in this common endeavour. We have listened to-day to some extremely interesting Budget speeches, but I think we can more usefully employ the very short time which is left by confining our attention more rigidly to the Finance Bill, in the hopes that our comments may assist the Chancellor in dealing with the Measure in its later stages. Budget Debates are always of interest, and I like especially the theses and excursions which, from time to time, my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) puts before the House. But our time is short, so I propose to deal with one or two purely Finance Bill topics, based on the Budget Statement and the Resolutions we have passed.
The Chancellor has, in this Bill, accurately fulfilled the promises he made to us. Indeed, he has gone beyond his promise in the case of Death Duties on estates of civilians killed by enemy action. Here I believe the House will unanimously agree in thanking him for his proposal to meet the hardship of estates having to pay the full amount of Death Duty, as if

people had lived their full and normal lives. Another point, which is not yet in the Finance Bill, but which the Chancellor led us to hope may be there, is the question of tax-free charges. It is a point which I put before the Chancellor and his predecessor in correspondence some time ago. These cases do involve a real grievance, which I trust the Chancellor will be able to deal with during the Committee stage. The sort of case which an accountant in my constituency put to me—and he tells me it is not at all an uncommon case in Yorkshire—is that of a family business, which has been left, by will, to one member of the family, with charges on the business to other members of the family, those charges being payable tax free. That was a perfectly simple arrangement when Income Tax was 2s. 6d. in the £, but when Income Tax has reached 10s. it imposes an extremely heavy charge on that type of business. My accountant friend tells me that there are cases where he thinks it might mean bankruptcy.
Another subject with which I should like to deal is the question of Excess Profits Tax. Here again the Chancellor has fulfilled his promise. He is dealing with wasting assets in a way which is subject to some criticism by those interested. It is said that an attempt to discover with precision, for taxation purposes, the life of, say, a tin mine, is scarcely practicable. In any case, it would involve so much expert examination, and examination of properties perhaps at the other end of the globe, as scarcely to be worth while undertaking. It is suggested that some easier form of dealing with wasting assets should be discovered. I am sure if there was such a form that the Chancellor would adopt it, but I am not myself in a position to make any positive suggestion. The allowance in respect of additional capital, if borrowed, meets a real need. I would suggest, however, that the Chancellor has not really met the Basic requirements which must be met if Excess Profits Tax is not to be excessively injurious. It must have many injurious repercussions, but still it might be possible to lessen the evils which are inevitable in a tax of that kind.
While welcoming the tax of 100 per cent., I suggest it might be possible to give more elasticity to the basic standard, because as the tax stands there is no reward


at all for additional productive efforts. An industry with which I am very familiar is the rubber-producing industry. I do not consider it ought to claim any special treatment, But it is not a bad example of what is happening to a good many industries called upon to produce something in the nature of an additional 40 per cent. compared with a few years ago. It produces, and will go on producing, but it is not allowed to make a single penny more by reason of that increased productive effort. I do not want it to pay more dividends, and I do not want the 100 per cent. to be changed, but I consider that as a result of that increased productive effort more should be made available to reserve. That, I believe, could be done by a greater elasticity in the basic standard. But, of course, the 20 per cent. that can now be put to reserve and will be paid after the war is some remedy for the position to which I have referred.
The real evil of this tax, as is known to everybody in the House, is that it stimulates extravagance, as was pointed out by the hon. Member for Chesterfield (Mr. Benson) and others. I was glad that the Chancellor referred especially to Clause 26, which I attempted to understand with only partial success. I believe it is the intention of this Clause to deal with cases where firms have indulged in expenditure which will be paid out of sums that would otherwise go to E.P.T. It deals with cases where one of the purposes of a transaction is the lessening of the liability of E.P.T., but when I read the Clause I could not make up my mind whether that would cover every case in which additional expenditure would be out of surplus funds or whether it would refer to exceedingly few cases. In my experience of E.P.T. I have not found people who go out with the deliberate intention of lessening their liability for E.P.T. In the case of Surtax I have come across people who have gone through most elaborate devices and indulged in what, in the Statutes, we call artificial transactions, in order to lessen their liability for Surtax. But I have not come across that kind of thing in relation to E.P.T.
The process is different. What happens is that a management desire to make some added expenditure, perhaps see some

useful way of spending money, and having decided that, they consider where the money is coming from. They say it will come out of surplus profits, which, if not so used, would go to E.P.T., and they are naturally encouraged to embark upon that expenditure. Let me take a simple and common case—that of wages. People get round the table and discuss whether there should be a rise in wages. All parties at the table know perfectly well that the rise will not come out of surplus funds. It will come out of State funds, because but for that rise it would go to E.P.T.

Mr. Thorne: They do not give increases so easily as that.

Sir Frank Sanderson: The hon. Gentleman will appreciate that industry does not grant increased wages merely because the demand is made and because the increase would be paid out of E.P.T. There is a good reason why; they always have an eye upon the state of affairs at the end of the war.

Mr. Denman: The hon. Gentleman interrupted me too soon. I never hinted that a wage increase would be granted. I was indicating the position where everybody knew that if an increase was granted, it would, in fact, come out of Government money. That may or may not be conclusive influence in a given case, but my point was this: In that case the management know that the money will come from E.P.T. Is that the case in which, in the words of Clause 26, one of the purposes of the expenditure was reduction of E.P.T.? I find it extremely difficult to say at what stage the knowledge that expenditure will lessen one's liability to E.P.T. is the same as a purpose when one makes an expenditure in lessening liability for E.P.T. If they coincide, the Chancellor has within his net what I think he would agree would be an unreasonable number of cases, and the more so, because this provision is retrospective. It seems to me very hard, if a firm was told that one of its objects in creating a wage increase was a lessening of E.P.T., that the sum so expended must be deducted from its standard profits and not from its surplus profits. I hope the Chancellor will tell us what he really has in mind and say what type of cases he proposes to meet. All of us would agree that anything in the nature


of artificial transactions designed to avoid E.P.T. ought to be sat upon retrospectively. But if he is to try and catch the perfectly normal and almost inevitable happenings in the conduct of business, I think it would be creating a real hardship.
There is one further point in that connection. This matter is to rest upon the opinion of the Commissioners. Will the Chancellor assure us that the Commissioners will be prepared to give an opinion on a case put before them in advance? It is exceedingly hard to conduct business if you are about to make an expenditure and you have no idea where the money is coming from. Take another very common case. Suppose one of your employés is conscripted for military service and you decide to pay him the difference between what he has been earning in your employment and his military pay. That may be extra expense which will come solely out of E.P.T. I think you ought to know before you do it that it is a matter on which the Commissioners are likely to have an opinion on Clause 26. Whatever you do, I suggest that this tax is bound to cause a certain amount of slackness in economy and of extravagance. I think it is inherent in any scheme in which a management sees that the whole surplus revenue is handed elsewhere to spend.
Hon. Members must not think that this is a particular disease of capitalism; it applies quite as much to socialised organisations as to private organisations. It was the system under which Post Office finance was regulated some time ago. The Post Office had to pay over its old surplus revenue as the Treasury might like, and that was only because there was within the Post Office a Treasury officer who kept a very tight control on all expenditure. What E.P.T. is really doing is to introduce that old and discarded system of Post Office finance into industry in general and not to put within the offices of the different firms anyone who can exercise Treasury control.

Mr. Benson: Does the hon. Member suggest that the Post Office Fund was instituted to give the Post Office an economic incentive?

Mr. Denman: No; I simply say that it was found to be an exceedingly bad system, and one that was not conducive to

the highest efficiency, that all the profits 0which the Post Office made should be handed to the Revenue. As the hon. Member knows, that system was altered. The Post Office were told to pay a certain fixed sum to the Revenue and the balance was left largely with them to be dealt with at their own discretion. That illustrates my point that the old Post Office procedure was a quite unsuitable method of dealing with surplus profits. The resultant evils are quite obvious. The resultant evils of this encouragement to extravagance and slackness in economy arc that production costs are bound to rise somewhat. The after-war position, with which we cannot unduly concern ourselves at the present time, will be that our industries will find great difficulty in competing in overseas markets. But there is one other evil which I think the Chancellor of the Exchequer should particularly have his eye on, and that is the possible loss of revenue. Although he is getting the 100 per cent. Excess Profits Tax on a reduced amount, he is losing Income Tax and Surtax on the higher amount that would have been available in profits but for the encouragement to extravagance of the Excess Profits Tax. I do not say that at the present moment the Chancellor has anywhere reached the point at which he is making a loss on the transaction, but I think he will have to consider the risk of loss of Income Tax and Surtax that is caused by the extravagance in the management of companies. I have occupied all the time I wish on this subject. I congratulate the Chancellor on a Finance Bill which, I am sure, he will have no difficulty in getting through the Committee stage. There are points that will arise which we can suitably discuss on the Committee stage. For the moment, I wish to say no more in commendation of this Bill.

Sir Frank Sanderson: I wish to pay my tribute to my right hon. Friend the Chancellor of the Exchequer on his speech in opening the Debate. He made a very comprehensive statement which I feel sure the House and the country will accept in the spirit in which it was made. My right hon. Friend has introduced a Budget which is very drastic in its measures and demands great sacrifices. Those sacrifices will be made provided that the money which is raised by taxation is spent economically. The hon.


Member for Central Leeds (Mr. Denman) made special reference to the incidence of the Excess Profits Tax, and it is to that matter that I want particularly to address my remarks. I know that it is unpopular to discuss the incidence of high taxation, and I assure my right hon. Friend that I do so in a spirit of helpfulness. None of us expect at this critical time to do other than pay to the maximum of our ability, but it is well to consider the matter when it can be shown that the incidence of taxation minimises the country's efforts and places industries in a position that will make it difficult, if not impossible, for them to recover to normality after the war.
In discussing the Excess Profits Tax, one is rather disposed to imagine that it is a very simple process of merely taking what may be termed the cream from any balance sheet, namely, the whole of the profits which may have been earned in excess of the average of the years preceding the war. In practice, of course, that is not the case. This is what really occurs. In the course of the development of industry, new plant and machinery are installed, and larger stocks have to be carried, all of which requires capital to finance it. When a company arrives at the end of its financial year, it finds that, with the incidence of the Excess Profits Tax at 100 per cent., it is left with fixed assets which have been paid for not out of profit that has been earned during the year, but out of the accumulated profit of preceding years. I think I can best illustrate my point by giving three examples, taken at random, which demonstrate the harshness of the 100 per cent. Excess Profits Tax. I see no reason why I should not mention the names of the companies. The Coventry Gauge and Tool Company made a profit of £232,000 last year. Out of that it paid £210,000 in taxation—91 per cent. of the whole. Another company, Barrow, Hepburn and Gale, which is, I believe, the largest tanning and leather manufacturing company in the country, made a profit of £627,000 last year, and paid in tax £548,000, no less than 87 per cent. of the whole of its profits, leaving it with a net profit of £79,000, that is, £10,000 less than their profit of the preceding year, when they earned £400,000 less profit. In recent years, that com-

pany has had to write down its capital by no less than £2,300,000. The last case which I want to quote is, I think, even more clear; it is the British Celanese Company. Last year it made a profit of £977,000 and paid £635,000 in taxation.

Mr. Silverman: Will the hon. Gentleman inform the House what dividends these companies paid?

Sir F. Sanderson: Yes, certainly—out of which they pay £635,000 in taxation, leaving a net profit of £342,000. In this case the company has not paid any dividends upon its preference issue of £4,250,000 for the last 10 years, and it has paid no dividend on its ordinary shares for the past 20 years. In fact, it has never paid an ordinary dividend at all. I find it very difficult to believe that it is in the interest of the country as a whole that practically the whole of the earning capacity of a company should be taken when it is unable to meet its obligations to its preference shareholders, and I cannot help but feel that in cases of that character my right hon. Friend should be more generously disposed. Indeed I think it is very difficult to lay down a hard and fast rule. I should like to congratulate him on his decision to grant E.P.T. concessions to mining and other companies with wasting assets. I would suggest, however, that it is vital, if the concession is to be of any real value, that it should be on very much more simple and straightforward lines. To carry out the regulations to be formulated by the Treasury, particularly in time of war, when the transport of mails from Africa and other parts of the world is unreliable and slow, would make it impracticable, if not impossible. I venture to suggest that it would be far more practical and economical to grant an average concession to all. This would prevent an army of accountants and mining engineers directing their attention to non-productive work at a time when their services are so urgently required in other directions.
I pass from E.P.T. to Surtax. I realise here, too, that I am on dangerous ground. I wish to demonstrate that with a 10s. Income Tax, we really have arrived at saturation point in regard to Surtax. In my opinion the incidence of the high Income Tax and Surtax will bring about diminishing returns. From incomes over £10,000 my right hon. Friend takes no less than 19s. 6d. in


the £. It is profitable for large property owners to forgo the whole of their rents. The 6d. in the £that they retain does little more than cover the cost of collection and the necessary solicitors' and accountants' fees. That brings me to a point which I have consistently urged. I have asked my right hon. Friend whether he could see his way to permit, as a charge against income, costs incurred by accountants in preparing that income. There is surely a greater reason to-day why it should be permitted. It seems grossly unfair that one has to provide accountants to prepare one's Income Tax and Surtax returns and that the cost has to be borne out of the slender net income remaining.
I recall the case of the Prime Minister's salary which the House voted for him, based upon the principle that the dignity of the position warranted such an income. To-day, when Income Tax and Surtax are deducted, the Prime Minister's salary is £3,160. If the House really desired that the Prime Minister should enjoy a salary of £10,000, it would have to vote no less than £266,960 per annum. It may not be considered expedient to pay the salary free of Income Tax and Surtax. I suggest that it is in the interest of the country that the Prime Minister should have a salary which would relieve him of any financial responsibility. I am not referring to the Prime Minister of the day, but to any Prime Minister whoever he may be, and I suggest that he should not pay Surtax but should be subject only to Income Tax. My right hon. Friend the Chancellor may wonder whether I include him in what I am saying. My reply is in the negative, because I feel that if he and other Cabinet Ministers were relieved from the burdens which they impose upon others they would not appreciate the magnitude of direct taxation.
I will give one other figure to demonstrate the magnitude of modern taxation. When a man has an income of £10,000 a year taxation leaves him £3,160 net. Any income in excess of that amount pays in Income Tax and Surtax no less than 19s. 6d. in the £, leaving only 6d. in the £. I had a case brought before me only last week of a certain great industrialist who offered to sacrifice his commission, which amounted to £10,000. He stated that in these

times he would like to forgo it. When one realises that what he was really forgoing was not £10,000 but £250 a year, one will appreciate that his magnanimous gift was not so great as it appeared to be. I demonstrate these points because it is obvious to me that the incidence of Income Tax and Surtax is so heavy that my right hon. Friend will get a reduced amount in the form of Surtax. People will not take the income, and if they do not take it, my right hon. Friend will not get the Surtax on it. He will get only the Income Tax. I suggest that it would be expedient to consider whether the ceiling for Income Tax and Surtax together should not be 18s. in the £. I suggest that amount because my right hon. Friend in the greatness of his heart is to reduce the Excess Profits Tax, approximately, to that amount. I really think that it would be worth my right hon. Friend's while to consider whether he should not, even at this late hour, make the ceiling of Income Tax and Surtax a figure not exceeding 18s.
I claim that the incidence of this high taxation strikes at the economic structure upon which our business, our institutions and our life are built. How is a man in the region of the larger incomes to meet the expenditure of his life insurance premiums? Obviously he cannot do so and his insurance will have to go by the board. Questions of education, public schools and universities, subscriptions, donations and so forth are also affected. The question of real savings has been raised by several hon. Members. I was pleased to hear an hon. Member say that we must look in future in the main for the savings to come from the wage-earning classes. In 1938 the national income was £4,415,000,000 and in 1940 it was £5,568,000,000. Of the increase, Excess Profits Tax took £210,000,000, and of the balance of £943,000,000 no less than £663,000,000 was due to increased wages. It is obvious that it is in the main to the wage-earning classes that my right hon. Friend must look for his savings.
I must refer to the cost of the interest and management of the National Debt because it is a matter which is to the credit of my right hon. Friend. In the financial year ended on 5th April, 1941, the cost was £230,000,000. My right hon. Friend estimates that this year the figure


will be £255,000,000. Many Members have expressed the view that the increase is becoming serious and that is an important fact which my right hon. Friend must always bear in mind. But has the House forgotten that in 1930–31, the interest and management of the National Debt cost £292,000,000, namely, £37,000,000 in excess of the cost to-day? That is attributable to two factors. The first is my right hon. Friend's financial policy by means of which he is borrowing money at a rate of interest as low as three-quarters of one per cent, and in the main on a basis of 2½ per cent.
In the last war we were paying no less than 6 per cent. upon Treasury bills. The change is due to my right hon. Friend's predecessor, who was responsible for reducing the interest paid upon a great part of the National Debt. At the present rate of national expenditure it will not be until October, 1943, that my right hon. Friend will be faced with the same weight of interest and management expenses as was borne in the year 1931. To have achieved this result great credit is due to my right hon. Friend the Chancellor. After the war world competition will be unprecedented in its severity. We shall enter the struggle to retake our position as the world's greatest exporter, stripped of a great portion of our foreign securities and exchange, with a great portion of our shipping lost and our industries depleted of the reserves which they would have built up in normal times. These considerations must not be lost sight of, and we should prepare the way to meet them now whilst there is time.

Mr. Mander: I find myself in general agreement with the proposals in the Finance Bill, and intend to confine my remarks to one subject only, on which I put a Question to the Chancellor of the Exchequer last week, when he was good enough to say that he would give it careful consideration. I refer to the anomalous position of British subjects who are at present residing overseas, more particularly those in the United States of America. The points I am putting forward and my proposals for a solution of them are not made, I can assure my right hon. Friend, without full knowledge and upon the very best advice which I have been able to obtain. I suggest that the

law should be altered in order to make available for the full purposes of the war the property and services of British subjects who are living abroad. I do not intend to deal with the question of evasion, though when we come to the appropriate Clauses I may have something to say about that as it affects British subjects overseas. The position is that British subjects living overseas are not subject to the foreign exchange regulations, are not liable to pay British taxes upon income arising outside British territory, are not liable to military service, and do not come under the provisions of the Trading with the Enemy Act. The last two are matters whch obviously do not come within the scope of this Debate, but as regards the first a British subject living in the United States has no obligation to declare his dollar holdings, and the Government cannot obtain them by making a vesting order.
There are a number of instances of British subjects who have deliberately moved to the United States. Some of them lived on the Continent, and when the collapse of France came they went to the United States—I do not say deliberately in all cases. There are British subjects there who are enjoying large dollar incomes and are not accountable to our taxation. The absurdity of the position is that if instead of going to the United States they had gone to any part of the British Empire they would have had to surrender their dollar securities to the British Government. I understand that a substantial leakage has taken place, and is going on now, through the West Indies, and in particular through Jamaica, and I hope that my right hon. Friend will consider carefully whether it cannot be stopped, because my information is that substantial sums in sterling have gone through that channel to the United States and are being used free from any form of control or taxation. That sort of thing is harmful to our cause on the other side of the Atlantic. At a time when Americans are making sacrifices to help us, for which we are very grateful, it is very unsatisfactory for them to see British subjects in uncontrolled possession of large incomes and nothing apparently being done about it in this country. They are inclined to think we have not done all that we could, and they are right in so thinking. I suggest that British subjects resident or domi-


ciled outside British territory should be made to declare all their foreign holdings and the Treasury be given power to requisition those holdings, taking each case on its merits. No doubt the length of residence abroad would have to be taken into consideration, and possibly there ought to be some income limit because we want to deal only with cases where substantial sums of money are involved.
Then we come to the question of Income Tax. Americans living outside the United States have to pay United States Income Tax, except upon earnings they may obtain in the particular country of residence. I suggest that in the same way British subjects in the United States should be made liable to British taxation. Some of the incomes in question are very large, yet there is no legal liability on the possessors of those incomes to support the war at all. In particular, there is a group of British actors in Hollywood in that position, and a great deal of criticism which is going on amongst Americans would be avoided if such persons were made to contribute their share towards the common effort. I am sure that proposals of this kind would be heartily welcomed by all decent British subjects living in the United States, many of whom would welcome being placed in a position where they were made to stand together with us who are living in the home country.
I suggest that the Income Tax law should be amended so that all British subjects living abroad with an income exceeding a fixed sum—perhaps it might be £1,000—should be liable to pay the standard rate of British Income Tax, after credit had been given for the tax paid in the United States. If, say, a man had an income of £3,000 a year, and the British tax was 50 per cent. and the tax in the country of residence 25 per cent., then he would have to pay a 25 per cent. tax to this country. That would end the extraordinary anomaly under which British Government officials who are recruited locally in the United States are exempt from all tax. For instance, the members of the British Purchasing Commission and the members of the British Air Commission recruited in the United States—British subjects—are exempt from this taxation, whereas their opposite numbers who are doing the same kind of work over here are liable.
The Chancellor of the Exchequer no doubt will say that he quite agrees with all I have said, in equity. He will say that it is sound common sense, but how are you going to do it? I will address myself to that point. Enforcement is possible if you really wish to do it, and certain sanctions can be applied. I suggest, first of all, that, if there is refusal either to surrender dollar holdings or to pay tax, the refusal should render the person liable to a very heavy fine or a long term of imprisonment. You have to apply pressure to these people to make them stump up. Some are anxious to pay and some are not. You could not prosecute them in the United States or extradite them, but you could lay down that if ever they set foot on British territory they will be liable immediately to arrest and prosecution, and that if the particular country in which they are now living were to come into the war as an ally of ours, we should take the matter up with that ally with a view to the surrender of those persons. Another method could be the revocation of passports and deprivation of British nationality.
All the things which I have mentioned would have considerable weight upon the persons concerned. They should be liable to forfeiture of all their assets in this country, and the Crown should have the right to seize any interest in any property which they may have over here. They should be treated as enemy aliens under the Trading with the Enemy Act. Those are perfectly sound and practical proposals which could be put into operation, and they do not go beyond the necessities of the case, if British subjects are deliberately running away from their duty, and from what we pay willingly and gladly here, in spite of the heavy burdens of the war. Not many persons would resist cumulative pressure of the kind I have outlined. Drastic as many of the proposals are, they do not go beyond the necessities of the case. The Dutch are doing something of the same kind to their citizens living abroad in similar circumstances.
In this connection, it should be laid down that no British subject should leave the United Kingdom without giving an undertaking to hand over any foreign exchange that he might later on acquire. There have been several examples of exit


permits being granted when there has been no control over the amount earned. I suggest that there should be an obligation upon the persons concerned to file a return as to their income from overseas every three months, and a duplicate of the Income Tax return made in the United States should be added. Existing permits should be revoked if obedience is not given to these requisitions.

Sir Percy Hurd: Has my hon. Friend any figure in mind as to the amount?

Mr. Mander: No, I have not, but I understand from the best sources that it would be well worth while taking the necessary steps to carry out my suggestions. I hope that my right hon. Friend and his financial advisers will give this matter the further consideration which it deserves. If persons living overseas are made to pay their fair share of taxation they will still be spared the bombs which we get here. They ought to be only too delighted, as I am sure a great many of them are, to be brought into line. If my right hon. Friend puts into force some such measure as I have suggested he will achieve three results. He will obtain substantial sums of money by way of revenue; he will silence some perfectly legitimate criticisms by American citizens made at the present time and he will be helping a large number of the British subjects concerned who want to do their duty to feel much happier than they do now.

Mr. Spens: I apologise to my right hon. Friend that I was not able to be here this morning to hear his speech. Perhaps it may be some small part of an excuse to say that I have been occupied in one of these cases which arise under the Bill. I am only too delighted to find that he is considering the problem which has been raised, with a view to possible legislation. I am certain that this is a field in which, at a very early stage, and particularly as the war progresses, more and more legislation will be required. The matter is far too technical for me to deal with in detail at this moment. I wish to address my remarks to one or two subjects which I feel, I hope not without good reason, require further consideration.
I notice that, generally speaking, people talk of the Excess Profits Tax and deal with all the problems which

arise out of it, as though it had no sort of relation with any other taxation in the country. That is a fundamental mistake. You cannot possibly separate the Tax from the present rate of Income Tax and from the other contributions which have to be made under other Acts, all bearing upon industry, and you cannot regard it as unrelated to the general problem of what is going to happen to business premises and factories which are destroyed by enemy action. Somehow or other, you have to get a clear picture of the extraordinarily complicated financial situation in which industry finds itself at the present time. Therefore, in putting forward my criticisms I feel a great deal of diffidence. I do not think it is possible for any back bencher to get a complete view of the present financial situation. I can well understand that many criticisms may have a very swift and easy answer. If so, when some of us try to think out these problems and find ourselves in doubt we may comfort ourselves with the idea that perhaps we are not the only people who share that doubt.
The thing which worries us very much is the total effect of the taxation on the physical well-being of our factories, workshops, industries and so forth. In normal times you have the double position that every industrialist is entitled, before he pays Income Tax, to claim certain deductions for the upkeep of his plant, premises and so forth. Everybody knows that every really well-run business, year by year, has to put back into the business a very substantial part of its surplus, which is the taxable profits of the business, and that any company which distributes by way of dividends the whole of its taxable profits is simply on the road to ruin as fast as it can possibly go. Leave out for a moment the Excess Profits Tax, and let us consider the effect of the rise of Income Tax to 10s. in the £. It means that that fund, which in normal times is the source from which these sums may go back into the business, is decreased by the enormous difference between peace-time Income Tax and present war-time taxation. Therefore, in any event, there is left a very much smaller sum out of which the necessary reservations may be made to assist the business.
In addition, war-time industries—and by war-time industries I mean those which are directly contributing essential goods


for war-time purposes—are being pressed by the Government to work at the fullest possible pressure to increase their output in every way, and they are therefore driving their plant and machinery to the utmost capacity. Of course, the output goes up—I hope it goes up enormously—and then in comes the Excess Profits Tax, and what the firm is left with is the standard profit of the standard pre-war period. Everything else is taken, and the standard profit is taxed at 50 per cent. To my mind, that creates a very frightening picture. It can be dealt with in two ways. It can be dealt with by seeing that depreciation and maintenance allowances are very generously interpreted. There are regulations—they are far too technical to go into on the; Floor of the House—which I believe enable a very generous attitude to be taken up by the officials concerned, and I believe that that generous attitude, under the direction of my right hon. Friend, can be encouraged and developed. I impress upon him to the utmost of my capacity my hope that he will encourage extreme generosity, and if necessary see that other regulations are made which will enable the most generous attitude to be taken up.
One has to go a little bit further than mere maintenance. The history of British industry indicates that our prosperity depends on the drive and originality of our industrialists, and that means development and experiment. Both are equally important, and the cost of development and experiment, in a large number of cases, was met out of savings of taxable profits in the case of a really prosperous industry. As far as I can see, that fund has gone altogether for the time being. I cannot see how it exists at all under the present system of taxation. It may be that because all the important industries are now controlled by Departments of the State an industrialist can go to the appropriate authority of the Minister of Supply, or whoever it may be, and urge that a particular experiment is valuable and may assist in the winning of the war, and in that way he may be able to get the money. I think, however, that there is a great deal of difference between borrowing money in that way through a Department of State and being allowed to keep money earned by the firm by increased production and using it, no doubt with the approval of some representative of the

Government, in direct development and experiment. I suggest to my right hon. Friend that the most careful investigation is required as to whether or not the provisions of the 100 per cent. Excess Profits Tax should be modified so as to enable additional sums, with the approval of the Treasury, to be put to purposes which might lead to the winning of the war.
1 would like to go one stage further. I have not listened to the whole of the Debate, but I have no doubt that other hon. Members to-day have emphasised that after the war competition will be terrific. The one nation that is going to lose in that competition is the nation whose industrial machinery has been allowed to fall behind. There is no question about that, and therefore", simultaneously with the winning of the war, somehow or other we have to be absolutely certain that our plant, machinery, workshops, and everything that is really essential to our peacetime production are kept up to the highest possible pitch. I am a little anxious as to whether a person who has his factory blown up will not be in a better position than the one who has to work at 100 or even 150 per cent. capacity during the war. At the end the latter may find that his machinery is worn out because he has not been able to improve it. I put forward these ideas to my right hon. Friend, because I honestly feel that we need some kind of a committee to study the commercial repercussions of the high taxation of industry.
There is another point in regard to which high taxation is causing a great deal of difficulty at the present time, although I have no doubt that many hon. Members will have less sympathy for what I am now going to say than they have shown up to now. But you have to take the facts as you find them, and in fact in this country to-day there is a certain number—not a great number—of very substantial settled landed estates, some of them in the country and some in the towns, and it is in regard to those in the towns that I particularly want to say a word. Where they are in individual hands and have not been turned, as so many of them have in the past 20 years, into a limited company, it is very well known that at the present time it is impossible to obtain any allowance for management, the collection of rents, legal advice, accountancy, surveyors' fees, or


anything approximating to what in fact the running of a large estate absolutely necessitates.
What is going to happen? Take one of these large estates in any of our big towns which has been well battered. Rents have gone down. Tenants are in a position in which they have never been before. There has never been a greater requirement for good management and good advice for everybody concerned. I, as a Tory, would put it in this way. In the interests not necessarily of the individual but of the community, while that system obtains— and it is certainly going to obtain during the war—is it not necessary that there should be some additional allowance for management, and so forth? This is, I believe, already a pressing evil in some towns; and it wants examination.
My right hon. Friend has given, not a general exception to mining companies, as an interjection from the other side of the House would suggest, but an exception to mining companies which have obtained a certificate from the Treasury to the effect that their efforts are absolutely essential for the winning of the war. That is a very different, and a much narrower, proposition and it is, I believe, essential for the winning of the war. On the other hand, when that certificate is granted, I most respectfully suggest, it opens up to accountants and to members of my profession a prospect of being able to assist the revenue by their earnings to a very substantial extent. I cannot agree that that is good machinery during the war. If relief is to be given to these companies, the great bulk of which are working in distant parts of the world, it is not going to be easy to find out what their deposits are and in what year their deposits would, in normal circumstances, run out. I suggest that we have to find some much simpler procedure. My right hon. Friend might take some simple rule of thumb. I have ventured to make one simple suggestion in a letter to him. Whether that is the best suggestion he will get I do not know, but the last thing we want at the present time is to have inquiries of this sort, which must involve a great deal of the time of men who ought to be employed on quite different matters.
It is obvious that a great number of hon. Members realise that we are going

through the greatest financial revolution we have ever gone through in this country, and the person who has speeded that revolution on its way, and at a pace unexpected in some quarters, is my right hon. Friend the Chancellor of the Exchequer, by means of this Finance Bill. I do not believe that anybody objects to the sacrifices which my right hon. Friend is calling upon us to make, but you cannot have a financial revolution of this sort without causing an enormous number of cases of terrific personal hardship. That process is very much assisted at the present time because in so many cases, under different Acts of Parliament and Regulations, private property, businesses and so forth are being taken over and managed by the Government. Nobody with any professional knowledge of the immediate results of these Measures can fail to have come across a number of such cases. My right hon. Friend has not altered, in any shape or form, anybody's immediate liability, in respect either of companies or individuals, for the payment of taxation and insurance. Indeed, he should not do so, but I am sure that he and those who work under him realise the number of cases of personal hardship which will arise, and he and his Department, in conformity with their public duty, should show such consideration as is possible to those who have a very hard task to fulfil in paying taxes of this description.

Mr. Price: The hon. and learned Member for Ashford (Mr Spens) has raised, among other things, the question of the taxation of industry. We cannot envisage industry to-day as working within the framework of peacetime. Everything is overlaid by the activities of the State, and the old standards of company finance must, inevitably, go by the board. At the same time, I think the Chancellor is wise in having made a reservation from Excess Profits Tax with a view to meeting the situation after the war, if it should prove—and this is the big question—that industry ever goes back to the pre-war position. On that subject, the hon. and learned Member and I would, no doubt, disagree. It seems to me that a much greater control by the State over, at any rate, certain industries is inevitable after the war. I will not go further on that subject.
The Debate, so far, has shown that uneasiness exists in regard to the long view


of the nation's finances and the necessity for looking for new methods of finance. Old measures, surely, cannot find these enormous sums. It is as much a question of cutting down private expenses as of raising funds from taxation of private incomes. It seems that the rationing of commodities, far more strictly than has been the case up to now, will be a most important weapon for keeping the nation's finances straight. That, of course, is outside the scope of the Second Reading Debate on a Finance Bill. However, on a short view, I think the Chancellor is to be congratulated on this Bill. He may not be able to tell us all that he has in mind for future Budgets, and the fact that we have come to our present position by slow stages leads me to hope that the next Budget will show an even greater appreciation of the long-term interests of finance than the present proposals do.
Stated briefly, it seems that the problem this year at any rate is to secure as much as possible of the increased income which has been created by the activities of the State. The Treasury must suck back the purchasing power which it has itself created. That is how Germany financed her rearmament and how she is now financing the war. The methods of a wage tax and a turnover tax are the principle instruments by which she attains her end. The Chancellor of the Exchequer is doing something of the same kind, but he is doing it more scientifically than it is being done, one understands, in Germany. The complicated schedule of Income Tax on wages, with allowances and deferred payments, is an indication of that. Nevertheless, there are some anomalies which my right hon. Friend will, I hope, rectify in future Finance Bills. The first Budgets of this war raised heavily the taxation upon the higher incomes, and this Budget has carried the process still further. If it is raised any more, I am inclined to agree with the hon. Member for Ealing (Sir F. Sanderson)—although I would not put it quite in the way that he has done—that the Chancellor might as well fix some limit. I would not put a ceiling to it; I would put a floor to it. The hon. Member would not raise Income Tax above 18s. in the £. I would put a floor to it in this sense. I would secure that there should be no incomes above £1,000 a year, by putting 20s. in the £ Income Tax on everything

above that figure. I suggest that those who are now in possession of such incomes would sooner meet death by decapitation than the "death of a thousand cuts" to which they are being subjected to-day. It might certainly involve a moratorium on civil debts and make it impossible for persons with incomes of over £1,000 a year to carry on their family obligations and pay insurances. But, after all, we are now, as an hon. Member rightly said, living through the greatest financial revolution the country has ever had. We are in it, and I do not think that the condition to which these people would be subjected would be any worse than the slow process by which they are now being strangled.
It is not there the problem lies. We cannot finance the war by the taxation of these higher incomes. Everybody knows that who looks into the facts. If you took every income of over £500 a year, it would yield only £620,000,000, which, I believe, would be merely "chicken-feed to the dragons of war" The Chancellor of the Exchequer is bound to come down to the lower incomes and to proceed by slow stages. One would have liked to have seen something similar to what my right hon. Friend is doing now started last year, as Professor Keynes suggested. At any rate, the Chancellor made a step in the right direction when he imposed upon employers the duty to disclose statements about their employés' incomes. There has been up to now a gap in the source from which revenue has been drawn in the neighbourhood of the £5 a week or £250 a year group, and if that is not dealt with in some way or other, inflation is inevitable. Therefore, the Chancellor of the Exchequer is to be congratulated on having extended his taxation into that sphere of incomes. He has done it in a way which will, I think, to some extent, sugar the pill. In the lowest grades of these incomes the deduction will take the form of a deferred payment; in the higher grades it will take the form partly of deferred payment and partly of Income Tax. The right hon. Gentleman has in this Budget realised Professor Keynes' plan, which was put forward last year.
There is only one matter of regret that I have to mention. The Chancellor has made no provision for family allowances. I believe that it is possible to finance a


scheme of this kind out of the existing sources of taxation. It could have been tacked on to this Budget, if the Chancellor of the Exchequer had seen his way to prepare the necessary measures by which it could be done. It would not increase purchasing power except where it was most needed. We do not want to raise purchasing power in such a way that it would put an increased demand upon commodities. People with small incomes and the sections of the community most in difficulties, with large families, earning no very large incomes, must be helped even now. There must be no question of failure to do that because it might raise the purchasing power of that section of the community. In war time particularly, prices are an immense burden on that section of the wage-earners who have large families.
In many ways our industrial and economic system is unfair. The wage system gives only the same wage to a man with no family, as to a man with a great many children. The State ought to take cognisance of this fact and allow, by a system of family allowances, for this inequality. The State does make some allowances to-day. It recognises, by a system of children's allowances for Income Tax, that the man with a family requires some greater recognition in the payment of his tax. Men serving in His Majesty's Forces also are entitled to allowances in this way. Unemployment benefit and public assistance take cognisance of this fact. The service allowances alone come to about £20,000,000, unemployment assistance and public assistance allowances to £16,000,000, and the Income Tax allowances to about £10,000,000, making a total of about £40,000,000. If the sum of 5s. a week were allowed per child to every family, financed out of a scheme of this kind, the amount would probably come to somewhere in the neighbourhood of £120,000,000, and against that, £40,000,000 could be deducted from the old allowances to which I have referred when he recast the whole system. I believe that in some future Budget it will be desirable to merge the whole system of children's allowances into one big scheme. The very complicated and unsatisfactory system, by which we recognise in a half-hearted sort of way that children of working-class and middle-class families should

be allowed for, ought to be carried out in a more scientific way than is the case at present—not a bit here and a bit there, for in that way large categories of people are left out. At present, if a man is serving with His Majesty's Forces, he will receive some recognition, and if he earns an income of so much a year, he will receive recognition, but it is the poorly remunerated man with a large family who gets no recognition. I plead for a more scientific and uniform method of dealing with children's allowances. Out of the nettle of inflation, I hope the Chancellor will pluck the bud of financial stability. I believe he is doing it in this Budget, but let him go one step further and pluck the bud of family allowances, which will be a great social reform.

Mr. Molson: Last year I ventured to criticise the Budget, which was introduced in August, on the grounds that it did not—

ROYAL ASSENT.

Message to attend the Lords Commissioners.

The House went; and, having returned—

Mr. SPEAKER reported the Royal Assent to:

1. Public and Other Schools (War Conditions) Act, 1941.
 2. Allied Powers (Maritime Courts) Act, 1941.
 3. Fire Services (Emergency Provisions) Act, 1941.
 4. Great Western Railway (Superannuation Fund) Act, 1941.
 5. Southern Railway (Superannuation Fund) Act, 1941.
 6. East Surrey Gas Act, 1941.

FINANCE BILL.

Question again proposed, "That the Bill be now read a Second time."

Mr. Molson: As I was saying, I ventured last year to criticise the Budget which was introduced by my right hon. Friend on the grounds that it did not impose a sufficiently heavy burden of taxation on the people of this country and because it did not introduce the principle of compulsory saving. It is therefore natural that this year I should congratulate


him most cordially upon his present Budget. I feel that this is a Budget which will have the effect of imposing a burden on the country which is almost commensurate with what is needed and will divert manufacturing effort to the prosecution of the war. So far as Income Tax is concerned, I was extremely glad to hear him say that he had it in mind to legislate in cases where salaries are paid free of Income Tax. It seems to me that with the immense increase in Income Tax these contracts that were once entered into have now become extremely inequitable and that; it is only fair to the employers who entered into these contracts that they should be relieved from them. I think also as a matter of general principle, everybody in receipt of salaries of an amount which makes them liable to Income Tax should be called upon to pay that tax himself.
The system of the rebate payable at the end of the war in the case of the further taxation upon lower incomes is, in effect, the application of Mr. Keynes' principle of compulsory saving. It will not only help us in the prosecution of the war, but will, when the war ends and the great Government expenditure on war machinery stops, provide people with small incomes with the purchasing power to rebuild their homes or start up businesses, and will thus give a valuable stimulus to industry as it turns over to peace production. I do not, however, find myself in agreement with my right hon. Friend's proposals with regard to Death Duties. I have never thought it logical that in the case of a man killed in action a special concession should be made to his heirs. After all, it is the man who has been killed who has made the sacrifice. If that concession is to be maintained, however—and I have personally benefited by it—I entirely agree that in equity it should be extended to the heirs of civilians killed as a result of enemy action.
I heard with great satisfaction the Chancellor's statement about the assistance which Canada is making to our war effort. It gave me special pleasure, as one who is of Canadian origin. I hope the Government are following the policy of using our gold to the greatest possible extent in making payment for what is to be purchased overseas before they begin disposing of the securities they have

compulsorily acquired. Gold is a commodity which does not bring in an annual return in the way that securities which are held in Canada and in the United States do. Therefore, I trust that, although they must be requisitioned and disposed of in order to enable us to make the necessary purchases on the North American Continent, they will not be used until practically all the gold available has first been employed.
Now that Canada is making this special effort to help us, and now that the United States of America have passed the Lease-and-Lend Bill, I wonder whether my right hon. Friend would be prepared to reconsider the provisions under which, persons resident in this country are not allowed to make more than very small contributions towards the maintenance of evacuees in Canada and the United States. There is a very large number of English children who are being cared for in Canada and the United States, and people in this country feel that they would like to make some contribution towards the cost of maintaining those children. While I fully recognise the vital need to conserve all our dollar resources to the greatest extent possible, I hope, now that such generous help is being given to us by the Governments of that Dominion and the United States, this matter may be looked at again and some further concessions made. The generosity with which the children have been treated has been such that I am sure no demand on the part of Canadians or Americans has ever been made, but there are many people who would like, as far as possible, to make some further provision for their children who have been evacuated there.
The Chancellor of the Exchequer stated in his Budget speech that he intended to use public funds for the stabilisation, as far as possible, of the cost of living. I think we should, and do, welcome that provision, but there was no explanation given in my right hon. Friend's Budget speech as to whether this stabilisation of the cost of living is to be connected with a stabilisation of wages. The Minister of Labour has been pressed on a number of occasions to say whether the Government had a wages policy, and on each occasion he has replied that he wished to leave it to the organisation of the employers and the individual trade unions to continue with the established system of


bargaining, a system which has gradually been built up and has in peace time worked extremely well. But if it is the intention to stabilise the cost of living at the expense of the taxpayers, surely it is vitally necessary that one of the principal causes of a rise in the cost of living should be brought under regulation and control. Now, in war-time, when something like 63 per cent. of the productive capacity of the country is being used for the war effort, and therefore, is being bought by the Government, the Government are the principal purchasers, and it is therefore the Government which is chiefly affected by any increase in prices. It has moreover already been pointed out in the Debate that, owing to the Excess Profits Tax of 100 per cent., the employer does not stand to lose by an increase in the cost of production. If now the cost of living is to be stabilised at the taxpayers' expense, that is a third way in which the taxpayer is himself directly affected by a rise in the cost of living.
I was glad that my right hon. Friend referred in particular to the importance of preventing the costs of transportation being raised. Freights upon the railways probably affect the cost of living more directly than any other single item which goes into the costs of production and the sale of articles in the shops. We know that at present the old peace-time machinery for the adjustment of railway wages is operating and that a claim for increased wages has been made by railway workers. I hope I shall not be accused of being unfriendly to labour, or of desiring unreasonably to restrict wages, and certainly not of beating them down. But if we are to have a clearly organised and coordinated economic policy for the prosecution of the war, it is necessary that the purchasing power of the pound sterling inside this country should be maintained. I hope therefore that this great step forward which the Chancellor of the Exchequer has announced means that the whole matter is to be considered from the point of view of establishing a regulated, co-ordinated and fixed level of wages and prices. The increase which is now taking place in many industries in the rates of wages paid is causing a good deal of resentment among soldiers who have been called up and are required to make their contribution to the war effort without

sharing in the increasing prosperity of those, frequently their brothers, cousins or neighbours, who have not been called up and work in industry.
I hope in this same connection my right hon. Friend will give sympathetic consideration to the proposal for family allowances. I am not urging that that should be instituted as a separate step in social reform, but rather to justify and facilitate the stabilisation of wages. The varying requirements of wage earners can be provided for by the family allowance and so that in that way it will be possible to maintain a standard of living of the worker and to fix wages at about their present level, which have already shown a very substantial rise above what it was before the war. I should like once more to congratulate my right hon. Friend upon the character and scope of his Budget and of the Finance Bill, but I hope that in the Government reply we may hear that the Budget is not merely the work of my right hon. Friend and the Treasury, but a first step towards a more logically worked out economic and wage policy than we have so far had during the present conflict.

The Financial Secretary to the Treasury (Captain Crookshank): It is never very easy in winding up the Second Reading Debate on the Finance Bill to gather together, at least into an artistic whole, the various threads that have run through the Debate, because the problems that have been discussed have been partly financial, partly economic, with a few references to Clauses in the Bill, one or two kites flown, and from my hon. Friend the Member for East Wolverhampton (Mr. Mander) certainly an oddity. The Finance Bill as it comes to this House every year is really the legislative channel through which the Budget proposals pass on their way to executive action, and it rests with this House either to block and dam the channel or to clear it, so that it gives it an easy passage. It seems to me, from the reception which was given to my right hon. Friend's speech and to his proposals on an earlier occasion, that there will be very little of the former and that we shall all unite in trying to get this Bill through as quickly as possible. By and large, everybody has realised that it is, as the hon. and learned Member for Ashford (Mr. Spens) said, a financial revolution in its proposals. In spite of that, it has been accepted by hon. Members and by the


country as the only kind of structure which was suitable for this year 1941.
The right hon. Gentleman who opened the Debate was very kind in what he had to say. He made an interesting review, as he always does, of the financial policy, and he pointed out one thing which should be to our advantage in the years to come. That is, that we should make use of the experience which we had as a result of what occurred immediately after the last war. It is a terrible catastrophe to any of us sitting here to have had two wars in our life-time, and if we have suffered this catastrophe, let us gain such benefit as we can from the experiences that we have already undergone. While I am not prepared to discuss the question of the Gold Standard to-day, any more than the right hon. Gentleman was, I did wonder, when he said that the return to the Gold Standard, which was approved by this House, was the result of currency cranks disguised in orthodox uniform, whether the right hon. Gentleman who was Chancellor at the time could be identified as a currency crank or could be recognised as being dressed in any kind of orthodox uniform. The right hon. Gentleman has since then passed into a sphere which has made him the admiration of the whole world, and I should be sorry if he were called a crank.

Mr. Pethick-Lawrence: The right hon. and gallant Gentleman will remember that later on, in 1931, the right hon. Gentleman who adorns that bench admitted that it was rather against his judgment that he should be pushed into this course by the people to whom I referred as currency cranks.

Captain Crookshank: The right hon. Gentleman is referring to the people in the background as the cranks. Whoever they were, the step was accepted by this House as good policy then, and, like a lot of other things, it has not turned out as people anticipated. That is why I say that it is very useful to learn from the past, and the fact that the right hon. Gentleman called attention to that matter will not be lost sight of.
We have heard a good deal during the Debate on the subject of our general borrowing policy, partly on the question of savings and partly from the right hon. Gentleman on the ordinary arrangements for borrowing. I should like to say

something about what he said in an aside, but which might be misinterpreted, when he referred to the maximum interest rate of 3 per cent. That is not quite the case. It is true that a statutory maximum was put in one of the Bills, but that was dealing only with short-term borrowings, namely, Treasury bills and Ways and Means advances. There is no statutory 3 per cent. maximum for ordinary Government borrowing, but it is the general policy of the Government that that is the sort of rate which should not be exceeded, and my right hon. Friend does not withdraw in any way from the position which was adopted by his predecessor.
I have some figures here, which are not uninteresting, giving the average rate of borrowing during the war to show how we have profited from the experience of the last war. Whereas then we borrowed at 4½, 5 and even 6 per cent., we have not in this war issued a loan at more than 3 per cent. We paid in the last war 5 and even 6 per cent. on the shortest term loans we raised, that is to say, Treasury bills, as contrasted with 1 and 1⅛per cent. now. So there, again, a very great improvement is discernible, and that is an achievement which, as I think my right hon. Friend said in his Budget speech, we should constantly try to improve upon. In fact, about a year ago I did make a considered statement in this House on the general structure of borrowing, to which we adhere, but it is worth bearing in mind that we have recently been improving the position, so far as the Exchequer is concerned, because during the last year we have been able to increase the periods of our borrowing while keeping the general level of interest the same. That, as hon. Members will realise, is a very advantageous thing, and it speaks well for the credit of the Government.
As an example, the first War Loan, issued in March, 1940, carried 3 per cent. for a maximum period of 19 years, whereas 3 per cent Savings Bonds, which are now on tap, carry the same interest for a maximum period of 25 years, or 6 years longer. In the same way, the first National War Bonds carried 2½ per cent. interest for a maximum of seven years, whereas the maximum period of the 2½ per cent. War Bonds now on tap


is eight years. In both those respects we have improved the position as compared with what it was a year or more ago, and it is the hope of my right hon. Friend that we may be able to continue along those lines. But the small point which I wanted to put right, in case anyone outside is mistaken about it, is that this is being done as a matter of policy, adopted by the Government and endorsed by the House, rather than as a statutory obligation.
The hon. and learned Member for Montgomery (Mr. C. Davies) who, unfortunately, cannot be here now, made a speech which was somewhat gloomy for those who heard it. His theme really was that we were still not spending enough on our war effort, and yet at the same time he pointed out that our expenditure, which is reflected in part by the taxation in this Budget, was bringing very great hardships upon a great number of people. He made certain suggestions as to what ought to be done, and I do not know that I necessarily take exception to all of them, because a number of them are already being done. It may be that we are not doing them as intensively or as rapidly as he would like, but it is no good pretending that we are not doing them. He said that we must conserve all possible shipping space. If he knew what had to go on to bring imports into this country, and if he studied the import returns, he would know that precious little, if anything, now comes here from overseas which is not absolutely vital for either the nation's war effort or for food. He said that we must wherever possible substitute war manufacturing for peace-time manufacturing. I think the President of the Board of Trade must be spending a good deal of his time on that problem in dealing with the concentration of industry.
Then he said that we must get all we can from the land, whether in the shape of coal, minerals or food. The Secretary for Mines is at the moment engaged in discussions to see how far coal production can be increased, and my right hon. Friend the Minister of Agriculture and the Noble Lord the Minister of Food are in constant consultation with their colleagues about the maximum of food production in this country. Then he suggested that we must cut down consumption to the bone, and said that all articles in this country

should be rationed. It is an easy thing to say that everything should be rationed, but anybody who has had any experience of the administrative problems involved knows that there are limits to what can be rationed; and when he says that everything should be rationed, I assume he is going into a larger area than is covered by foodstuffs and the difficulties would be very great. But if that is merely a corollary of cutting down other forms of consumption, there are very few instruments which are going to be more effective for doing that than the taxation imposed in this very Finance Bill. I do not quarrel with what he says ought to be done, but I say on behalf of His Majesty's Government that the great bulk of it is already being done. It may be a question of speed and degree, but his suggestions have certainly not been ignored. Then my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) was speaking, as was the hon. Member who has just sat down, on the question of a general policy for wages. It is not for me, in winding up this Debate, to embark upon that fascinating problem, but, of course it is one of major importance, and hon. Members need not think that the whole of that aspect of our economic life is completely and entirely ignored. But that is quite a different thing from my making a statement on the spur of the moment about it, and I must respectfully decline to do so.
Those are the chief specific points from earlier speeches which I had it in mind to answer. The hon. Member for Ealing (Sir F. Sanderson) gave us a most interesting speech pointing out, as it is necessary to point out, how great this burden of taxation is going to be, but I think he went a little too far, because I understood him to say that incomes over £10,000 a year are taxed at 19s. 6d. That is not the case. What happens actually is that the slice of income which is over £20,000 is taxed at 19s. 6d., and if my hon. Friend will look at the actual tables, he will see that the effective rate at £10,000, in the case he quoted of a married couple without children, all investment income, is 13s. 10d.—heavy enough, but not as bad as 19s. 6d., if that is any consolation to those with an income of that amount.

Sir F. Sanderson: What I meant to say was that income from £10,000 to £20,000 was taxed at 19s. 6d

Captain Crookshank: That is where my hon. Friend is wrong; it is over £20,000. The hon. Member for Central Leeds (Mr. Denman) raised the question of Clause 26, which deals with the evasion of Excess Profits Tax. My right hon. Friend realises, as we all do, that the powers taken in that Clause are exceedingly drastic. When we come to the Clause in Committee, my right hon. Friend or I would be very pleased to give instances of the sort of evasions which have already been detected and with which we have to deal, and the point I would make in defence of this Clause, if it needs defence, is this: In the past there have been tax avoidances over the whole field of Income Tax and Surtax. There has inevitably been a time-lag in dealing with these matters legislatively, because they had to emerge first. They had to be spotted, and then the appropriate action had to be taken, after bringing the matter before the House. The Excess Profits Tax is; new, and the question of its collection is very important. From its very nature, being at the rate of 100 per cent., it has great repercussions in many directions and we simply cannot afford, on many grounds, to let abuses creep in and have a run of six months or nine months, or whatever it may be, until the next Finance Bill. That is the reason why this very drastic action has been taken. One must remember that, when the tax was raised to 100 per cent. last year, my right hon. Friend stated quite categorically in the House that if there were evasions they would be dealt with, and dealt with retrospectively. Therefore, if anybody has deliberately gone out for tax avoidance, such people have done it at their own peril and deserve no sympathy from any one of us.
The only other smaller observation I want to make is about the speech made by the hon. Member for East Wolverhampton. I hope that those who heard him recognise his wish to bring into the Exchequer all the money that can reasonably be brought in, but we must not get the impression from what he said, that every British subject who is abroad at the present time—many of them busily fostering the export trade, to the importance of which he has so often called attention—is a scallywag and a scrimshanker.

Mr. Mander: I did not say anything of the kind.

Captain Crookshank: That was rather the impression left on my mind. I think he used phrases that people who were deliberately running away and were not suffering from the bombs as we are, should be mulcted.

Mr. Mander: There are some.

Captain Crookshank: I should imagine that their number is so infinitesimal that we may leave them where they are and not cast aspersions upon other people who are not in that category at all. The problems to which the hon. Member called attention would be very difficult to surmount. However, he has made his point in the Debate, and, like everything else which is stated in Debate in this House, it will receive the consideration which it deserves.

Mr. Mander: I do not know whether the Financial Secretary to the Treasury is trying to be funny or not, but I would ask him whether he does not think, if there are persons who are deliberately going to the United States and elsewhere in order to avoid taxation, that they are unpatriotic people and that steps should be taken to make them pay?

Captain Crookshank: It is always unpatriotic to avoid taxation. We are at one on that. It is not so easy to go to the United States. We already control people leaving this country, but when it is a question of people already living abroad, going from one country to another, the matter is not so easy to control. While my right hon. Friend was speaking, the hon. Member for Chesterfield (Mr. Benson) asked whether deferred credits would be liable to Income Tax. The answer to the question is that they will not. The matter is not analogous to credits arising as a result of a concession on Excess Profits Tax. The reason is that deferred credits in respect of the Excess Profits Tax will be liable to Income Tax because, at the present moment, the Excess Profits Tax is allowable as a deduction from profits assessed to Income Tax. Therefore, any refund of Excess Profits Tax will have to be treated as additions to profits assessable to Income Tax in order to keep a fair balance between the two. Ordinary deferred credits will not be liable to Income Tax.
I might say a word or two about borrowing, which was referred to by various hon. Members. I was sorry not to have been in the Chamber while the hon. Member for Chesterfield was speaking more specifically about War Weapons Weeks, but I have already dealt with his point, to some extent, in a previous Debate on the same problem; and we are, fundamentally, at one about it. The real test of my right hon. Friend's Budget is whether the volume of genuine savings which can be brought to account this year is such as he anticipates. If he is wrong, that may well upset the balance of the plan that he has in mind; but, as he pointed out, he has good reason to believe that he is not very far wrong in the estimates he made. The position up to date in the war has not been unsatisfactory in that direction.
The other day I gave some figures elsewhere, which I will repeat for the benefit of hon. Members, as they are very interesting. In the first 18 months of the war, of every pound of expenditure, we got 8s. 6d from revenue, 4s. 6d. from over-seas resources, and 7s. from personal and corporate savings. The personal savings amounted to 2s. 9d., and the corporate savings were represented by the balance. But I must make this reservation. Corporate savings, of course, are in many cases the aggregation of personal savings. So far as they are, for example, the investments taken out by insurance companies, the amount may well come from the small weekly sums paid in; so far as they come from the non-payment of dividends by industrial companies, they represent what would have been private savings had those dividends been distributed. Out of over £2,000,000,000 secured by public loans in those 18 months, the proportion is this. Forty per cent. came through the floating debt, Treasury bills, and Treasury deposit receipts of banks, 30 per cent. from medium and long-term borrowings, War Loan, and National War Bonds, and the remainder from small savings. So, we have, for the first 18 months of the war, a good record from the point of view of savings. But it must be improved. That is the whole burden of what my right hon. Friend said to-day, and I hope it is the burden of speeches which hon. Members make in the country. It rests a great deal on the shoulders of Members of this

House to impress upon the public the importance of savings.
The hon. Member for Chesterfield took exception to-day, as he did before, to some aspects of War Weapons Weeks. He says that, often, targets are not put high enough, and that they are easily exceeded. But if that is wrong, it is not the fault of anyone except the local committees. The targets are not set by the Treasury or by the National Savings Committee. I agree that I have opened War Weapons Weeks in places where the target was exceeded before the flag went down. I do not know that much harm is done by that, so long as we get a large sum out of it. The real test is whether the general run of savings two or three months after the War Weapons Week is considerably higher than it was two or three months before. You want to have a regular steady flow through the savings organisations, which are largely organised in many places during that week, when public attention is focussed on the need for saving. As one looks at the figures, they do show that general rise. The hon. Gentleman, I gathered, took exception to some broadcast by Lord Kindersley, who has been such a tower of strength in this movement, which compared the weekly savings of 4s. 8d. per head for all the country from December, 1940, to February, 1941, with the £3 17s. 3d. per head contributed in 132 War Weapons Weeks, and he did not agree with those figures. I have made some inquiries, and I understand that in that broadcast Lord Kindersley was speaking of small savings in both cases and was comparing like with like.

Mr. Benson: I said so.

Captain Crookshank: What he was anxious to show was the stimulating effect during the week. There is no doubt that the week does have a very stimulating effect, but what we want to see is the stimulus kept up continually after the week is over, and there are plenty of figures to show that that sort of thing is happening. This week we have been having, as the Chancellor of the Exchequer said, the London War Weapons Week, and as he quoted the figures for yesterday, so now I am in a position to inform the House that the total at the close of banking hours to-day was the really vast sum—particularly in view of the


fact that there arc to-morrow and Saturday still to come—of £87,750,000. Figures like that in the Capital City show the world its determination to play its part in the financial effort, just as it has player) its part both in the lives of its citizens, and in the lives of its buildings on the physical side. I hope that when the final totals come to be cashed up, the world will realise that it is not only London which is concerned in this business of savings, but every village, every hamlet and every town.

Dr. Russell Thomas: Can my right hon. and gallant Friend say how much of this £87,750,000 has been subscribed by the banks, and how much is genuine savings?

Captain Crookshank: On this occasion I could not give any such figure at all, nor would I seek to make that distinction. The banks are perfectly entitled to make their investments in the various forms of securities which are on tap. They may put in more at one time in one place, in one week, for reasons of their own, but it is all part of their investment policy. Even if there was a difference, which I do not accept, it is unlikely that I could have got it so soon after the close of banking hours ready to give to the House now. Just as the savings for the war are of vital importance in the financial edifice which my right hon. Friend has built up, so we must bear in mind as well the very great difficulties which are to be involved upon nearly 8,000,000 as the result of the taxation proposals. Do not let us stress the one without the other. This does represent a real revolution in the situation of great numbers of people, and it is not always realised that, while the Finance Bill means that at the lowest end of the scale a single man earning 46s. a week will now be paying Income Tax for the first time at the rate of nearly 3s. a week—and that is a very heavy burden to bear because he pays indirect taxation on a number of things—at the other end of the scale, let hon. Gentlemen bear in mind, married men earning £10,000, £20,000 and £50,000 a year will be taxed at the rate of 68 per cent., 81 per cent. and 91 per cent. of their incomes, and they have heavy commitments with which it will be very difficult for them to deal as the war progresses. However, everyone in this country is at one. If this is the way which is necessary to finance the war, it will be done this way, and there will

be no squealing on the part of anyone in the community.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House, for the next Sitting Day.— [Major Dugdale.]

SUNDAY ENTERTAINMENTS ACT, 1932.

Resolved,
That the Order made by the Secretary of State under the Sunday Entertainments Act, 1932, for extending section one of that Act to the Rural District of Mildenhall, a copy of which was presented to this House on 20th May, be approved."—[Mr. Peake]

CRETE (ENEMY ATTACKS).

Motion made, and Question proposed, "That this House do now adjourn"—[Major Dugdale.]

The Prime Minister (Mr. Churchill): This is a somewhat indeterminate moment in the battle for Crete on which to make a statement, and I can only give a very provisional account. Fighting is continuing with intensity, and, although the situation is in hand, the Germans have gained some local successes, at heavy cost. They are using large numbers of air-borne and parachute troops, and these are being increased daily. The position at Heraklion is that our troops are still holding the aerodrome, although the Germans are now in what is called occupation of the town, which probably means that they are ensconced in certain buildings in the town. In the Retimo district there is no report of any particular fighting, although an attempt by the enemy to attack an aerodrome early yesterday morning was successfully held. In the Canea-Suda Bay sector heavy enemy air attacks in the early morning of yesterday were followed, in the course of the day, by further parachute landings South-West of Canea, which were heavily engaged by our artillery and machine guns. At Malemi Aerodrome, 10 miles South-West of Canea, it appears that the enemy are now in occupation of the aerodrome and the area to the West of it, but the aerodrome is still under our fire. Elsewhere in this sector the coastal line remains in our hands.
The fighting is going on, deepening in intensity, and will certainly continue for some time. Last night the enemy began to try sea-borne landings, but a convoy, making for Crete, was intercepted by our naval forces, and two transports and a number of caiques, Greek boats, which probably contained troops intended for landing operations, were sunk, and an enemy destroyer, which was escorting the convoy, was also sunk. But, during the course of to-day, very much larger attempts have been made by the enemy to carry an army into Crete, and a convoy of 30 vessels was discerned this morning by our forces, and was presumably attacked by them. My information is not complete to that point. The convoy turned away towards the Islands of the Archipelago, and was being attacked by our destroyers and light forces. I have not received any further information as to what happened, except that there has been a great deal of fighting during the day, with the enemy air forces attacking our ships, and we attacking the convoy. I am sorry to say that I have got no definite information as to the results, but I feel they can hardly be other than satisfactory, in view of the naval forces of which we dispose in the Mediterranean sphere.

Mr. A. Bevan: Will the Prime Minister use whatever methods are available to him to convey from the House of Commons, this Sitting Day, our admiration of and confidence in the defenders of Crete?

The Prime Minister: I certainly will. It is a most strange and grim battle that is being fought. Our side have no air, because they have no aerodromes, and not because they have no aeroplanes, and the other side have very little or no artillery or tanks. Neither side has any means of retreat. It is a desperate, grim battle. I certainly will send the good wishes of the House, and the encouragement and approval of the House, to these men who are fighting what is undoubtedly a most important battle which will affect the whole course of the campaign in the Mediterranean.

Mr. Hore-Belisha: As I asked the Prime Minister to make this statement, may I say how greatly the House appreciates his courtesy throughout the week in making these periodical statements, how gratified we are at those parts of the statements which have been satisfactory, and how we would wish to sustain those who, with him, are in this struggle?

Mr. Benson: The Prime Minister suggested that the other side have no tanks. Are we to imply from that that we have an adequate supply of tanks in Crete? If that is an undesirable question, perhaps my right hon. Friend will not answer it.

The Prime Minister: I certainly had not thought of following the matter into those categories.

Question, "That this House do now adjourn," put, and agreed to.